Salvage titles exist because it is obviously profitable for someone to buy totaled cars and rebuild them. But this even existing would imply that in some cases, an insurance company paid out more than the actual cost to repair the vehicle, because otherwise it couldn’t possibly be profitable.
For example, let’s say a car has a value of $30k and gets totaled. The insurance pays the owner $30k and sells the wrecked car to a rebuilder for $1k, so they are out $29k. If the rebuilder then spends $15k repairing the car and sells it for $20k due to its reduced value, they will make a $4k profit.
Thus, why wouldn’t it be better for the insurance company to just spend the $15k themselves to repair the car, write the owner a check for $10k for diminished value, and pocket the $4k while also avoiding whatever overhead it takes to do the transaction to sell the wreck? In addition, one would imagine that insurance companies could achieve much better scale and/or vertical integration by moving this operation in-house vs. small rebuilders.
In: Economics
I bought a salvage title car, from a reputable shop.. everything was above board.
In 2004 I bought a 2002 Chevy Prism (Secretly it was a Toyota Corolla) salvage for 5k.. it had 12k miles on it and was manual everything.. it did have both AM and FM capabilities.
I drove it for 20 years and only had to replace 1 headlight. Sold it a few months ago for 1200.. Darn kids and dogs couldn’t fit in it.. and my brother gave me his 2008 Mercury Mariner…
Anyway if you find a reputable place and you think of cars as a way to get from point A to point B… And on weekends point C… As opposed to a status symbol.. it can be an ok deal.
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