Salvage title cars: what the brand means and the risks

Does an ad say “salvage” or “rebuilt,” with a price noticeably lower than similar cars? This page explains what that label means in New York, what the DMV checks and what it does not, the pros and cons of such a car, and what checks exist before buying.

This is general information found in official sources, not legal advice. The rules are New York State’s. Other states have different rules.

In short

Salvage means the car was seriously damaged and an insurance company declared it a total loss, or repairs would cost more than 75% of its value.
After a DMV examination, a repaired car gets a title with the brand “Rebuilt Salvage.” The brand stays with the car permanently.
The DMV checks only whether the car or its parts are stolen. The examination does not judge the quality of the repairs or the car’s safety.
A low price is the one big advantage. The drawback is that judging the repair quality falls entirely on the buyer.
A free check of a car’s history by VIN is available in the NICB database. The FTC says a history report does not replace an independent inspection.

What salvage means

The New York DMV defines a salvage vehicle as one that:

was transferred to an insurance company with a Salvage Certificate (Form MV-907A) because it had significant damage from a collision, theft, vandalism or water;
has repair costs of more than 75% of its retail value before the damage;
was issued a salvage title in another state and brought to New York;
was declared a “wreck” on the back of its New York title by the owner at the time of sale or transfer.

The Federal Trade Commission (FTC), the US consumer protection agency, says the same thing more simply: a salvage title means an insurance company declared the car a total loss because of a serious accident or some other problem.

The National Motor Vehicle Title Information System (NMVTIS), the federal vehicle history system, says an insurer’s decision that a car is a “total loss” does not necessarily mean that a vehicle was destroyed or is worthless. It is a financial decision: the repairs cost too much compared with the car’s value. The label alone does not show what was actually damaged.

Salvage and Rebuilt Salvage are not the same

Ads often mix up these two words, but the difference is large.

Salvage. The DMV says it will not issue a New York title for a salvage car, or allow its registration to be renewed, until the car passes a special examination and the title is issued.

Rebuilt Salvage is a car that was repaired and passed that examination. The front of its title says “REBUILT SALVAGE” in capital letters. The DMV says this brand stays on the title for as long as the vehicle exists.

Some cars can never go back on the road. When an out-of-state title or a Form MV-907A is labeled “parts only,” “non-rebuildable,” “non-repairable,” “scrapped” or “destroyed,” the DMV will not examine the car or issue a title for it. The DMV says such vehicles are not roadworthy.

What the DMV checks and what it does not

This is the most important part, because many people get it wrong.

New York State law requires the DMV to check whether a rebuilt salvage vehicle is stolen or has stolen parts. The DMV says plainly that this examination is not a safety inspection, an emissions inspection or an insurance examination.

So the “Rebuilt Salvage” brand confirms only that the car and its parts are not stolen. The examination does not show whether the body was straightened correctly, whether the airbags work, or whether the wiring is unbroken.

For an owner who buys an unexamined salvage car to rebuild, the DMV sets these steps:

The application goes by mail only, on Form MV-83SAL.
The fee is $200 when the owner proves ownership with a New York Salvage Certificate (MV-907A), and $205 with another document.
According to the DMV, the application includes the original proof of ownership, the bill of sale and proof of sales tax payment.
The DMV asks for the original receipts for replacement parts at the examination and returns them afterwards.
The DMV says that driving the car to the examination requires a Temporary Transit Permit. The permit requires a safety inspection receipt and an insurance ID card. The other way is a tow truck.
The DMV says that when the owner arrives more than 30 minutes after the scheduled time, the DMV does not examine the car, and the owner pays an extra $150 fee.
When the car passes, the DMV mails the title in about 3 to 5 weeks. The car then also needs a registration.

Pros

Price. Such a car usually sells for less than a similar car with a clean title. That is why people buy one.
The damage may be light. According to the DMV definition, a car can become salvage after theft or vandalism too, not only after a serious crash. On an old, cheap car, ordinary body repairs can sometimes cross the 75% line.
For an owner who plans to keep the car a long time, the value lost at resale matters less.

All three points are true only when the buyer knows exactly what was damaged, and who repaired it and how.

Risks

Nobody checked the repair quality. The state examination looks for stolen parts. It does not cover the quality of the repairs.
A car that was in water. The FTC says water slowly damages mechanical and electrical systems and causes corrosion. Such a car may run well today and break down a few months later.
The brand is permanent. At resale, the next buyer sees the brand too and thinks about the price the same way the owner does now.
Insurance and loans. Not every insurance company or bank treats such a car the same way. We found no official rule on this: each insurance company and bank sets its own terms for coverage and loans.
The history may be hidden. The FTC warns that storm-damaged cars are sometimes cleaned up, taken to another state and sold there. The databases are not complete either: NMVTIS itself says a search may wrongly show “no junk or salvage history.”
Buying from a private seller. The DMV says a private seller does not have to follow important regulations that a dealer must obey. The DMV also says a buyer of a defective car from a private seller cannot file a complaint with the DMV or other consumer assistance agencies. What is left is an agreement with the seller or a court case.

Checks before buying

VIN. This is the car’s 17-character identification number. It is under the windshield on the driver’s side, and on the title. The number in both places is meant to be the same.
NICB’s free database. NICB, an organization of insurance companies, shows by VIN whether a car was flood damaged, stolen and not recovered, or declared salvage. The FTC says this database helps only if the car was insured when it was damaged.
History report (NMVTIS). The FTC says the site vehiclehistory.gov lists NMVTIS-approved companies. According to NMVTIS, the report shows the car’s title history, the most recent odometer reading, and whether an insurer declared it salvage or a total loss. The FTC says the report has a fee.
The original title. According to the DMV, the brand is printed in capital letters on the front of the title. The front also lists anyone who holds a lien on the car. The DMV says the seller must complete the damage disclosure on the back; without it, the DMV will not register the car or issue a new title in the buyer’s name.
The dealer’s written notice. The New York DMV says a dealer must tell a retail customer in writing that a car has a branded title. This can be on the bill of sale or on a separate sheet.
An independent inspection. The FTC says a vehicle history report does not replace an independent inspection. The FTC advises getting a written report from the mechanic with a cost estimate for all necessary repairs. If a dealer won’t allow an independent inspection, the FTC advises considering another dealer.
Parts receipts. According to the DMV, the person who rebuilt the car shows the original receipts for replacement parts at the DMV examination.
Recalls. The FTC says NHTSA’s site has a free lookup by VIN that shows whether a car has an open safety recall.
Insurance. We found no official rule on how such a car is insured: each insurance company sets its own terms.

Signs of a flood-damaged car

The FTC lists these signs:

mud or sand under the seats or the dashboard;
rust around the doors;
carpet that is loose, stained or does not match the rest of the interior;
a smell of mold or dampness, or the opposite, a very strong smell of cleaning products. That may mean someone is trying to cover up a smell.

What the official sources warn about

According to the DMV, the “Rebuilt Salvage” brand stays on the title for as long as the vehicle exists.
The DMV examination is not a safety inspection: it only determines whether the car or its parts are stolen.
According to the FTC, water slowly damages mechanical and electrical systems and causes corrosion.
According to the DMV, a private seller does not have to follow the regulations a dealer must obey. The DMV also says a buyer of a defective car from a private seller cannot file a complaint with the DMV or other consumer assistance agencies.
If a dealer won’t allow an independent inspection, the FTC advises considering another dealer.

If a buyer was misled

If a dealer knowingly sells a flood-damaged or salvage car as a car in good working order, the FTC names three places to report it:

NICB;
the complaint site ReportFraud.ftc.gov;
the state attorney general.

Key terms

Plain meanings. The Georgian word is in brackets.

title: the document that shows who owns the car (საკუთრების მოწმობა).
salvage: a car that an insurance company wrote off because of serious damage (სალვაჯი).
rebuilt: a salvage car that was repaired and passed the DMV examination (აღდგენილი).
clean title: a title with no such brand (სუფთა მოწმობა).
total loss: an insurer’s decision that the repairs are not worth it (სრული დანაკარგი).
brand: a label on the title that records the car’s past (წარწერა).
VIN: the car’s 17-character identification number (ვინი).
lien: a loan or debt tied to the car (ვალი).
recall: a maker’s call-back of a car to fix a defect (გაწვევა).
dealer: a company that sells cars (დილერი).

All words on one page: glossary (in Georgian).

Official links

Buying or selling a car?

Buy-and-sell listings from Georgians: buy and sell. Posting a listing is free.

This is general information and not legal advice. Rules and fees change. The current rules are on the official pages.