Salvage title
A salvage title is an automobile title with a notation that the vehicle has been damaged in excess of approximately 70% of its pre-accident market value. The exact percentage depends on the insurance provider and any applicable laws and regulations. This notation gets applied to a title when an insurance company pays a total-loss claim on a vehicle, but then allows the owner to retain or buy back the vehicle at its post-damage market value, which is often negligibly low. Often a vehicle is still safely driveable even if technically considered a total loss by an insurance company, particularly with older vehicles where even minor cosmetic damage would cost more to fix than the vehicle's original market value.
A junk title is a similar notation to a salvage title, but generally indicates that the vehicle is not roadworthy.
A rebuilt vehicle is a salvage vehicle that has been repaired and restored to operation. These vehicles are often severely damaged before they are rebuilt and refurbished parts are typically used during reconstruction. In most states, an inspection of the vehicle is required before the vehicle is allowed to return to the road.
There is no specific formula in most states that specifies when a vehicle is deemed salvage; this is typically decided on a case by case basis. Once the auto is determined to be salvage, it is sent to the salvage auction or offered to the owner as an insurance buyback. With an insurance buyback the owner is responsible for getting the repairs made and having the car inspected by the highway patrol or a state regulated inspection facility. At this point, the car is rebuilt salvage and will carry that stamp with it until it is recycled. If the auto is not a buyback, it is towed to a salvage auction where it will be sold to an auto recycler or a rebuilder. A recycler will dismantle the auto and sell inventoried parts. A rebuilder can sell the car as-is or fix the car and resell it as a rebuilt salvage car. Undisclosed rebuilds sold to consumers are obviously feared by prospective buyers.
Some companies in the United States, such as Carfax, sell title reports to prospective car buyers which, among other things, reveals these title statuses. The information, however, might be far from being complete because of the inability for these companies to check accident records in 23 states and not all accidents get reported to the authorities (particularly when there are no injuries). In 2007, Carfax settled a nationwide class-action lawsuit [1] and the company will now include prominent warnings that its reports may not be complete.