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Getting a Loan on a Salvage Title Car

Not all states or lenders allow salvage car title loans, but there are other options if you cannot get a salvage title car loan.

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Obtaining a loan for salvage title cars is no longer rare and can be done as long as you know what to look for. Different states will have different requirements for salvage title loans. 

Can I Get a Loan for Salvage Title Cars?

While some states and lenders do not allow loans on salvage title cars, it is not impossible to get a loan on a salvage title car.

All cars start with a clean title until the car is considered totaled by the insurance company due to an accident or other covered claim, rendering it unrepairable or not worth paying to repair. The salvage title is then born so that any future purchaser will know that the car was totaled beyond repair at one point.

If you purchase a salvage title car, you can get a loan under some circumstances with some lenders. Usually, a salvage title car is not financed, making it easier to get a title loan. 

What Is a Salvage Title? 

When a car has been in an accident or damaged another way, the insurance company has written it off as not worth repairing, otherwise known as a salvage title. Usually, when this happens, the car is taken to a junkyard or salvage lot to be destroyed or used for parts. 

It’s not uncommon for car lovers to put salvage title vehicles up for sale in hopes of either getting the parts for them, fixing them up to sell again, or even driving themselves. However, until the car is repaired and driveable, it will remain a salvage title car.

What Is a Branded Title? 

Branded titles will give you more detail on why the car is considered salvage. Often you will see things like flood, salvage, and junk, but these can be different in each state. When there is extensive damage, a branded title will tell you how the damage was sustained in some cases.

What Is a Reconstructed Title?

Salvage titles differ from rebuilt or reconstructed titles because rebuilt titles have been rebuilt or repaired from salvage cars. Afterward, they’re taken to the DMV to undergo a thorough inspection. After passing the tests, salvage title vehicles are then amended to rebuilt title vehicles. Sometimes having a rebuilt title rather than a salvage title can work in your favor with loans and insurance. 

Are Salvage Titles Bad?

Because salvage title cars are not allowed to be on the road and need extensive repairs to become road-worthy, there are some things to consider:

  • Safety – A car with a salvage title will not be safe to drive because it has incurred significant damage to earn that salvage title status.
  • Warranty – A salvage title car will lose any warranty it may have had before the total, so all repairs will have to come out of pocket. 
  • Financing – While some lenders will give loans to purchase a salvage title car, they are rare and hard to come by. Also, they usually charge a higher interest rate.
  • Insurance – Not all insurance companies will insure a salvage title car.

What Are Salvage Title Cars Good For?

A salvage title car is not all bad, and there are some situations where it may be beneficial to purchase one if you are able.

  • Need a Car – If you need an affordable option, this can be one if you have the means for repairs.
  • Commute – Perhaps you have a long commute and don’t want to put miles on your newer, nicer car.
  • Second Home – If you have a vacation home and don’t want to rent a car when you are there, you can use a salvage title car and leave it there. 
  • Parts – Always a good option if you need parts.

How Do I Get a Salvage Title Car Loan? 

Depending on the lender you choose, there will be different requirements for you to be able to get a loan. If you already have an established relationship with a lender, check with them first, especially if you have good credit and payment history.

A credit union is often an excellent lender to seek a loan for a salvage title car loan, but remember, you may end up paying a higher interest rate. You will need to weigh your options to see what makes the most financial sense. 

What Documents Do I Need To Get a Salvage Title Loan?

To help you get approved for the salvage title loan, it is best to come prepared. You will undoubtedly want to show that you have good credit, so anything to show you have that and good payment history is helpful.

Also, bring along any documentation that shows the car will be repaired, like a mechanic statement or estimate. It also would not hurt to have your driving record. The more you can show the lender that you are low-risk, the higher your chance of obtaining the loan. 

How To Qualify for a Loan if the Title Is Salvaged

There are a few ways to ensure you qualify for a loan if you have s salvage title car. 

  • Make sure that you own the car. A bank will not give you a loan if someone else owns it.
  • Have a vehicle history report and any plans for repairs.
  • Have your license with you and proof of residency.
  • Be sure to bring proof of a job or income, as you can’t get a loan without that.

Where Can You Get a Salvage Title Loan? 

Each state has a different approach to salvage title loans.  While some states don’t allow title loans at all, others do. Title loans on salvage titles can have different criteria depending on where you live. To find a lender willing to finance a salvage title vehicle in your state, you should do research in your state easily by a quick google search.

What Are Affordable Alternatives To Salvage Title Car Loans? 

If you cannot get a salvage title car loan due to poor credit history or simply living in a state that doesn’t allow them, you are not at the end of the road. You can consider looking for a reliable, older car such as a Nissan or Ford. You can quickly use the internet to see the consumer ratings on all vehicles and determine what may be a good option for you.

Once you decide on a make, do further research on the value to avoid paying too much for the car. You may also find that getting a loan for an older car, but not a salvage title, can be a bit easier when it comes to the lender requirements.