Want to Buy a Classic Car for Forty Percent Less?
Photography by Yoav Gilad for Petrolicious
Petrolicious readers no doubt spend countless hours poring over the auto classifieds when the fancy strikes them (which it probably does, and often). In fact, Petrolicious has just launched its own “Market Finds” section where we highlight some interesting and often rare automotive finds for sale. Some of these cars are affordable, some less so. But what if I could tell you that you could purchase almost any car that you desired for thirty to forty percent less?
How can it be? No, I’m not some snake oil salesman. What I’m speaking about is ‘salvage’. For those unfamiliar with the term, when a car is deemed irreparable by an insurance company following an accident, whether because the damage was so severe, or just economically so, the company will buy the car back from the insured, ‘total it’ by giving the car a salvage title, and sell it at auction (two of the biggest companies are Copart and IAAI) to recoup some of their losses. But is buying one of these damaged cars a bad idea?
To shed some light on the subject I spoke with a local salvage yard owner, Edvin. He buys and sells cars all day, morning to night, five days a week direct from the auction companies, and has the facilities to fix them on his premises. His shop has a frame jig and paint booth amongst other tools, as well as an experienced staff. He also sells cars to the public that aren’t fixed, leaving that task to the new owner. On the subject of why a salvaged car can be a good purchase, he cited the aforementioned statistic that you can, apples to apples, find the same car for less (30-40% in good running and driving condition) when they hold a salvage title.
That’s a car that has been fixed, and made road worthy (and almost every model on the market is available with a salvage title, yes, even classics) from your common daily drivers to more exotic fare from the likes of Porsche, Ferrari, Mercedes, and BMW. One of the caveats however is that you have to be a cash buyer. Most prime lenders will not loan money for a salvage title vehicle because of its unknown value and history.
Edvin’s shop fixes many of the cars they resell to the public without taking any shortcuts, but Edvin points out that some buyers, when they purchase “fixed” cars, can’t always know the severity of the previous damage. That’s why he stresses that one needs to see photos of the vehicle before and after the repair process. These photos will be helpful to you to assess how bad the damage was (and your threshold for such damage), and if the repairs were done properly with no shortcuts taken. All car parts are not created equal, and cheap aftermarket or used parts may cause problems on the road.
If you choose to repair the car yourself (as I did on a 2004 Jaguar XJR with a front end impact), documenting the repair will help you show the inspector (in areas that require it) where the damage was, and what parts were replaced so you can get the car re-titled and registered for the road again. If you decide to resell the vehicle, having this information for the next buyer will be helpful as these cars are sometimes difficult to sell to the next buyer, and he or she will likely have the same concerns you did. Every state and country has different requirements, so check these before you invest time and money in a project.
Some of the other pitfalls to buying salvage is that Blue book sites (like Kelly Blue Book) don’t value rebuilt cars, and many times nobody knows exactly what they are worth. That’s why sellers sometimes offer them for pennies on the dollar, but a good rule of thumb is 30-40% off. The same holds true when you go to your local DMV to register your car, or even with your insurance company. Typically you will save money there too. Some insurance companies will match the reduced value to a lower premium. You can turn this into a plus, because you bought your car at a reduced price, with low insurance, and low taxes based on the reduced value of that particular car. On the flip side, some insurance companies might choose not to insure you, or might charge the premium of a “clean title” vehicle…but pay nothing in the event of the claim.
Edvin cautions to stay away from flood vehicles as problems with electrical systems might not manifest themselves for months or years down the road, and to buy “light hit” vehicles (i.e. no frame or structural damage). Maybe just some cosmetic damage, or a theft recovery that only requires cosmetics. Do these things, and under optimal circumstances the buyer can use the salvage title value to their favor: they got their car cheap(-er), and they get to keep it on the road for less money, with a lower insurance premium based on the reduced value of the car. The car will take you where you need to go if properly repaired, just as if you had gotten into a fender bender and had it repaired. And if it does all that for however long you drive it, you saved money.
And if nothing else, remember: you drive the car, not the title.