This article is by staff writer William Cowie.

What was your first reaction when you saw “salvage title” in the headline? Cringe and shudder? Outrage, that anybody could seriously suggest something so risky on a respectable site like this? In mixed company, no less? Step away from the ledge, slowly, exhale, and then hear me out.

I used to feel the same way … until my friend Peter showed me his “new” 4Runner. Peter is a super-frugalista, and he saw the surprise in my eyes. He laughed, “Hey, it’s a salvage title — I got it real cheap.” He bought his son one of those, seven years back, and that car has run problem-free all that time. So he thought, “Why not get one for myself?”

Why not, indeed?

What is a salvage title?

It begins with what people sometimes refer to as a car being “totaled” or “written off.” “Total” is simply shorthand for “total loss,” meaning the amount an insurance company pays out for the car’s full insured value. Most often, it’s a collision that causes a car to be totaled; but they can also be totaled after a fire, flood, hail, or even theft. (If a car is stolen and not recovered for three to four weeks, depending on the jurisdiction, the insurance companies have to pay the insured, which, of course, turns the theft into a total loss.)

Insurance companies typically total a car damaged by accident, fire, hail or flood when that damage is greater than its value. They naturally want to pay the smallest amount possible and, if that’s the value of the car, then that’s what they pay. When they do that, they effectively buy the car and its title passes to them. If they subsequently sell it, they are required to sell it with what’s called a salvage title.

Why even consider a salvage title?

A car only gets a salvage title when something bad happened to it. Buying a used car is such a crapshoot to begin with, why compound that by even thinking about buying one with a salvage title?

One word, the word we associate most with Get Rich Slowly — “money.”

A fully repaired car with a salvage title typically sells for 30 to 40 percent less than one with a clean title. If you were eyeing that $15,000 used minivan, a comparable (i.e., fully repaired) one with a salvage title would typically go for $9,000. That’s a savings of $6,000.

That’s a pretty compelling number if you’re interested to save money.

I don’t know if you heard, but someone just paid more than $30 million for a used Ferrari at the Pebble Beach auctions last week. The car was in a major wreck, but it was restored. The point is: a wreck doesn’t necessarily mean the utter demise of a car. Any car can be repaired or restored to mint condition. The trick, of course, is not to overspend – and to know it was done right.

Does a salvage title make sense for you?

The first thing you need to do is find out if your state allows vehicles with a salvage title on the road. Colorado, where I live, does. (That’s how I found out about it.) So, if your state allows it, you could potentially save a lot of money on your next car if you are one of the following kinds of people:

1. You drive your cars for many years. A salvage title stays with the car for the rest of its life. If you bought it for 60 percent of its normal value, you will only be able to get 60 percent of its normal value when you sell it. The longer you drive the car, the smaller the penalty at the time of selling. The net result is that you save a lot when you keep it for a long time. However, if you sell your car every two or three years, your savings at the time of buying will be negated at the time of selling, when you’ll have a harder time trying to sell it and you’ll have to take less. (In most states, sellers have to disclose a salvage title at the time of sale.)

Also keep in mind that most dealers will not take a car with a salvage title as a trade-in.

None of those issues present a problem if you plan to drive the car into the ground and then give it to your son going off to college in thirty five years’ time. :)

2. You usually buy older cars to begin with. The cost to repair a new car is not much different than repairing an older car. That means it will take pretty extensive damage to a fairly new car to get it totaled, because it’s still quite valuable. On the other hand, an older car is worth much less, even if it’s in good condition, and it doesn’t take much in the way of damage to get the insurance company to total it. In fact, a fender bender will often do it.

What that means is you can save 30 to 40 percent on an older car with a salvage title that has suffered only minor damage. (It’s a good general rule to stay away from salvage-title cars less than three or four years old.)

3. You’re not afraid to do some repair work yourself. If you know your way around a junk yard and you’re not averse to scraping your knuckles a bit, you can save even more than the 30 to 40 percent by buying a salvage-title car that hasn’t been fully repaired yet. If you can figure the cost of the repairs still needed, you deduct that from the 60 to 70 percent before you make your offer. Then you add some weekend and evening sweat equity to add that value back to the car – and you know the quality of the work that’s been done.

Buying a car with a salvage title is obviously not appropriate for everyone, and this post doesn’t try to make that point. All I hope to do is spotlight an option you may not have considered before but which might work for you.

Tips for buying a salvage-title car

As the saying goes, there’s no free lunch. In order to capture the gain of having a serviceable car at a 30 to 40 percent discount, you have to put in some time you wouldn’t ordinarily spend. Remember your first reaction above when you first heard the term “salvage title”? Everyone you deal with will have the same reaction. And because they’re not getting a big discount on their purchase, they don’t have any incentive to stray outside the box to accommodate you. That means more work for you.

1. Negotiate. Sellers will try to slide by with a discount of, like, 15 to 20 percent on the normal price, hoping buyers won’t know the appropriate discount from normal. Salvage-title vehicles is a buyer’s market; be sure to pursue the maximum advantage.

2. Financing: You should be able to get financing for a car with a salvage title, but it won’t be nearly as easy as for one with a regular title. The bank’s problem is the resale value of the car, which is much less than that of a comparable car with no title problems. If you are paying a lot less for the car to begin with, this isn’t that much of a problem. Expect to do more shopping, though. Personally, I think cash is the best way to buy a salvage-titled car, especially because of the next point.

3. Insurance: Insurance companies, for the most part, won’t offer the comprehensive insurance lenders require. They will offer collision and liability coverage; but, again, expect some push-back and more time shopping around for insurance. If you buy an older car for cheap, your insurance requirements aren’t that much, and you can get what you need. Most insurance companies will insure salvage titles cars just fine. Just be mindful that for them there’s not much difference in repair costs; so don’t expect any price break, even though your car was a lot cheaper than a comparable “regular” car.

4. History: Before you even make an offer on a car with a salvage title, you would be well advised to spend the time necessary to track the entire history of the car’s title. In particular, it’s important to find out (not from the person trying to sell you the car) what happened: what type of crash and the extent of the damage. CARFAX is a good starting point, but expect to do more digging.

Also included in the history research is the seller. Some businesses who sell salvage-title cars are reputable; others are not. Be sure to check with the Better Business Bureau to see if this seller has had issues.

5. Inspection: It is good practice to have a professional inspect any used car you’re interested in buying. Although it may cost a hundred or two, I look at that as insurance: It’s much better to find out about any defects before you plonk down your money. If it’s a good idea for all used cars, it’s essential for a salvage titled car. In particular, you need to have someone check out the wheel alignment. In the old days, they used to talk about frame damage, but most of today’s cars don’t have frames any more — the entire body acts as the frame. If the axles get twisted out of alignment, the car is a pain to drive and it will double your tire wear. A body shop inspection will quickly reveal if that’s a problem or not.

6. Pre-registration: Some states require a police inspection and a certificate from the police before they will register a car with a salvage title. This is aimed at making it difficult for stolen cars to get back into circulation. You will need to do your homework on this issue before making your purchase as well.

In conclusion

Good wisdom says even if you buy a clean-titled, used car you should do most of these things (e.g., have someone check out the car and research the title history) so the additional legwork might not be that much for you.

My wife and I tend to buy used cars and then keep them till they’re seriously long in the tooth, and then we give them away. Given the success my friend had with his salvage-title car, I’m seriously going to consider going that route next time we buy. The key, I believe, is to be very careful and to be prepared to kiss many frogs before finding the salvage-title prince.

Like many things in life, there’s a reward for risk and/or hard work. If you’re prepared to consider buying your next car with a salvage title, you may be able to pocket a significant savings. It’s not for everyone, obviously, but it’s nice to know an option like this exists.

This article is about Cars

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This post is by staff writer Honey Smith.

Just because two people hear the same word or phrase, doesn’t mean that they are conceptualizing the same thing. For example, I live in the desert, so when I say that it’s “cold,” it’s a pretty safe bet that I’m talking about something different than the person who lives in Vermont. Similarly, if I say it’s “humid,” I am probably not thinking about the same thing as the person who lives in Florida.

It comes down to the difference between denotation and connotation. “Denotation” refers to something’s definition or literal meaning. “Connotation,” on the other hand, refers to what we associate with the use of a particular term. Connotations can be cultural in nature, though they may be based on personal experience. They can also evoke strong emotions (positive or negative), in both the speaker and the listener.

I have noticed this tendency come into play right here in the comments of GRS. “Get Rich Slowly” is the name of the site, but what do those words mean? What, exactly, is “rich”? What do I think “slowly” means? Is that the same time frame you have in mind? Why does it matter, anyway?

What it means to “get rich”

Does “rich” mean a million bucks? Does it mean homeownership? Does it mean financial independence? Is being rich even something that can be restricted to money? “Financial independence” seems to be rising to prominence as the preferred term in personal finance circles these days (as opposed to a term like “retirement”). I think that is in part because it assumes a more encompassing understanding of the term “rich” than simply money. For example, “financial independence” assumes something about how you spend your time.

For one thing, “financial independence” assumes that you may still be interested to work. However, when you no longer have to spend nine hours a day earning the money you need to survive, then you are free to spend that time on other things whether it’s part-time work, a change in fields, volunteering your time to a cause that’s near and dear to you, or spending time with friends and family.

“Rich” implies something else completely, at least to me. When I think of “rich,” I always think of Scrooge McDuck swimming in his vault of gold coins. In other words, to me the term “rich” has a tinge of selfishness. It calls to mind someone who has more than enough money to do anything they want, but who doesn’t give — of time or money. Given the connotation I apply to the terms “rich” and “financially independent,” I know which I’d rather be.

What it means to get rich “slowly”

At what pace do you have to be moving to be slow? If you’re still in the debt-payoff phase, should you allocate all your discretionary spending possible toward that goal in order to get out of debt as quickly as possible? Do you have to be gazelle-intense, or is it okay to pay off your debt at a slower pace so that you can allocate some funds toward wants?

And if you’re in the asset-accumulation phase, is it okay to act like a corporation, obligated to make every decision with an eye toward shareholder profit? Do we have a duty to live up to our potential? Or is it okay to take a lower-paying job that you enjoy in order to create the life you want? What if it means that you are still dependent on a paycheck and may have to work until you reach retirement age, or even later?

It’s like the saying goes, anyone who drives slower than you is an idiot and anyone who drives faster than you is a maniac. As long as you are moving at a pace that works for you, why does it matter to you what other people think of your progress? Why would you care about the pace of other people’s progress? Does it make a difference if they’re your friend or family as opposed to a stranger? Does it matter if they have dependents, or if they’re dependent on others? Is there morality in personal finance?

Why you should do what works for you

Do what works for you is one of the fourteen core tenets of Get Rich Slowly. At the end of that article, J.D. Roth says:

“Don’t listen to anyone who tells you there’s just one right way to do something. Each person is different. What works for one person may not work for another. Be willing to experiment until you find methods that are suited to your life.

“Make informed choices, understand the consequences, and focus on your goals.”

This doesn’t mean that you don’t have things to learn from other people. I think it’s always important to consider how other people’s methods and circumstances can inform your own. Sometimes, you’ll find the best tips and tricks come from those you have a lot in common with. Other times, you’ll find that stories from someone in completely different circumstances and with radically different values can change your perspective for the better.

Doing what works for you means letting go of your fears about what other people might think about your decisions. However, it means letting go of your fears because you have carefully considered all the options and are making the best decision for you and your circumstances. It means that your spending matches your values. Being certain that you are doing what works for you doesn’t mean that you become certain about what other people should do. It doesn’t mean your way is the only way.

Final thoughts

In a way, the key to success is selfishness. Don’t be influenced by the connotation “selfishness” has for being a bad thing. It can be good! “Selfishness” means that you shouldn’t be afraid to take tips or learn from anyone who might help you reach your goals. You also shouldn’t let your goals be dictated to you by friends, family, or society at large. However, if being selfish means being primarily concerned with your own welfare, then it also means not judging other people for having different priorities than you (assuming their priorities don’t harm others).

What does “success” mean to you? What does it mean to be rich? Is it okay to get rich slowly? How slowly? What if you never want to be rich, or you want to get rich as quickly as possible?

Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want to submit your own reader story? Here’s how.

I don’t spend lavishly on clothes, hair appointments, or travel. I drive a 12-year-old Honda Civic. I got into debt by trying different business investments, including real estate and selling refurbished tablets. I also took out a student loan that I really didn’t need but couldn’t turn down the money I automatically qualified for. Those are the main sources of my debt.

My debt payments began to total more than $1,100 a month. I moved in with an aunt and uncle to make ends meet. When they wanted to raise the rent, it was the straw that broke the camel’s back. I was fed up with my situation. I couldn’t even afford to rent a room anymore.

I took a drastic measure, which I know most people won’t agree with. I decided to move into my car. But that wasn’t all. There was no way I was going to live in my car for any length of time and come out in the same situation.

I buckled down and reviewed Dave Ramsey’s system. I was familiar with his program but had never really studied it or applied it. I made a commitment to live differently from that month on (September 2013). It took two months to save up $1,000 for an emergency fund and to pay off my seven smallest debts. The third month, I brought current a credit card that was three months behind. Life felt so much more manageable. I could answer the phone again without trepidation. Eight months later, I paid off all three credit cards.

It wasn’t just living in my car that did it, though. After I made the commitment, I got an insurance payout for damage to my car, a refund from the doctor, and some other small financial blessings here or there. All of that “extra” money went toward my debt. Before, it would have gone toward … who knows?

For the winter months, I moved in with a friend and rented a room for less than what my aunt and uncle charged me. She has been really understanding and was helping me out. However, in one month, she will need her room back. Since starting this journey, I’ve lost a job, faced medical emergencies and car breakdowns, and learned new survival skills.

Only two of my friends know about my situation. I’ve worked hard to keep it hidden from coworkers and family members. They will only worry about me, and they can’t give me the help that I really need. I have blogged about my experience anonymously. I’m bracing myself for the negative backlash from readers – “You’re stupid. That’s dangerous!” Still, I am excited to be on this temporary journey and just thankful that I have the independence, the mental fortitude, the creativity, and the good health to make this happen for myself. I am $10,000 richer so far in less than one year!

[Editor’s Note: This is an amazing story; but we wanted to understand Livinginmyhonda’s reasoning on some things, so we asked:

Q. Why did you take out a student loan that you didn’t need?

A. I took the student loan because it was free money and I also wanted to continue investing in real estate -- ultimately it helped me sell the two properties I owned. I had to bring money to the table. Not what I had in mind originally. Dave Ramsey would call it a stupid tax, and so would I.

Q. Where are you living in your car? Do you live in a WalMart parking lot?

A. I park my car in hospital parking lots (lots of security cameras, guards on patrol, and employees coming and going all hours of the night). I also park on the street outside an apartment complex that I used to live in. There are no parking restrictions there and I feel relatively safe in that neighborhood. (I know that no neighborhood is perfectly safe).

Q. Are you currently working?

A. I'm a teacher. Three months after I started this debt-free journey, I was blessed to lose my job. It turned out to be a blessing because I got a job that pays 35 percent more (even though I loved the first job dearly).

Q. How do you manage grooming, etc., to go to work each day or to go to job interviews?

A. I got a gym membership so I would have a place to shower. After leaving the gym, I go to my storage unit and change clothes. Then I go to work. I spend the rest of my time in parks, libraries, fast food restaurants, or staying late at work.

Q. You say you are $10,000 richer. What do you mean? Is it because you have paid off your loans or by saving money in an emergency fund?

A. I feel richer because of the debts paid off so far and because of the security that a starter emergency fund gives. After paying off credit cards this past spring (three months ahead of schedule due to the new job), I started a car replacement fund. My car is 12 years old, and I consider this fund to be my way of paying off debt in advance.

Q. Do you plan to find a place to live?

There was no answer to this question, so we have to hope that Livinginmyhonda will once again find a stable and safe living situation.]

Reminder: This is a story from one of your fellow readers. Please be nice. It can be scary to put your story out in public for the first time. Remember that this guest author isn’t a paid or professional writer and is just learning about money like you are. Unduly nasty comments on readers stories will be removed.

This article is by staff writer April Dykman.

My personal finance education began here at Get Rich Slowly. I went from owing more money than I had to being debt-free (although now I have a mortgage). And along the way, I learned about money on websites and blogs. I used Mint to get my spending aligned with my goals and to track debt repayment. I opened and started managing my husband’s and my Roth IRAs online too.

Basically, I did it all via the Internet, no human contact involved. That really worked for me, both because I’m a research-nerd and because, as a perfectionist, I wasn’t about to tell a soul that I had credit card debt. And even when I had the money to start putting toward retirement, I still didn’t get advice from an adviser because I didn’t think the amount I was investing was significant enough. I thought only people with real money hired advisers. Also, I just preferred to set up a target date fund and be done with it, rather than risk hearing a sales pitch or feeling pressured.

I guess when it comes to personal finance, I’m a Lone Wolf McQuade, if you will. (Sorry, I’ll stop now.)

But according to a new Gallup poll, I’m in the minority, at least for now. “Even as access to the Internet has become ubiquitous in the U.S. and data analytics is highly touted for use in finance, U.S. investors are more likely to have a dedicated financial adviser than to use a financial website to obtain advice on investing or planning for their retirement, 44 percent vs. 20 percent*,” writes Lydia Saad for Gallup.

Furthermore, 35 percent of investors use a financial advisory firm with an advice call center and 29 percent rely on a friend or family member. So using financial planning and investing websites comes in dead last. Shocking, I know!

And of course, it’s not like investors are getting advice from one and only one source.

“Overall, 79 percent of investors report using at least one of the four financial advice resources tested, while 21 percent don’t use any of the four,” writes Saad. “The largest percentage of investors — 40 percent — rely on just one source, but almost a third (30 percent) rely on two, 7 percent on three, and 2 percent on all four.” (Wait — 21 percent of investors polled don’t use any of those four sources for investing and finance information? I’d sure like to know more about that!)

Who’s afraid of online investing?

Not surprisingly, there’s a good reason why most investors are weary of the web even though everyone you know uses it for everything they do.

According to the Gallup poll, it’s investors with significantly more invested ($100,000 plus) and retirees who are most likely to use a financial adviser human. They have more money at stake, for one thing. Also, a lot of it is generational. Among non-retirees, 66 percent were somewhat or very comfortable investing and getting financial advice online, compared with just 35 percent of retirees.

Help! I need somebody…

At least for now, the majority of investors want advice from an expert to help them and give them advice.

“Despite lots of buzz about online financial tools that allow users to submit their portfolios to computer algorithms, most investors still feel more comfortable involving a human, whether in the form of a dedicated personal adviser or a financial advisory firm that gives them access to live counselors in a call center,” writes Saad.

But ideally, investors would use a combination of methods. “[This shouldn’t be an either-or situation,” she writes. “Investors who want the best of both worlds can probably get it by seeking a partnership with financial advisers who are tapping into the same powerful analysis tools being offered to consumers online. In fact, such a marriage of humans and computers could be a strong selling point for the financial services industry — bridging consumers’ reluctance to go it alone online with their desire for a human connection and the best possible performance for their investments.”

*Poll findings are based on a sample of U.S. investors with $10,000 or more in stocks, bonds, mutual funds, or in a self-directed IRA or 401(k).

So, readers, are you Team Human, Team Robot, or do you use a combination of the two? And if you prefer to go it alone online, would you change your mind if you had $100,000 invested or were near retirement?

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