Expert: Bennie719 - 4/4/2009

Question
Hello, we have found a great 2007 Toyota Prius that we would like to purchase.  It has a salvage title.  We know the person who has the vehicle and know that he has done the work necessary to get the vehicle into top shape.  We will get a loan for this vehicle from our credit union.  Will we be able to get full insurance coverage for this vehicle?  We are in NC, and I believe the vehicle is also from here.  Thanks@!!

Answer
Hi Christine,
In my opinion, the purchase of a car with a salvage title or as commonly referred to in the industry as a "dirty" title, is certainly NOT a good idea.  Especially a two year old model with a high dollar value.
Rules may vary by state, but here in California, no insurance company will put full coverage (comprehensive & collision) on a vehicle with a salvage title.
The sources that you would refer to establish value such as Kelly Blue Book (KBB), National Automobile Dealers Association (NADA) etc.
will not attempt to put a value on a vehicle with a salvage title.

It will be extremely difficult to secure financing for a car with a salvage title and impossible if you can't get comprehensive and collision.

If you should secure a personal loan and pay cash and then drive with liability only and your vehicle was hit and became a total loss, damaged by another party who was at fault and insured, their insurance will offer a payment equal to 40%-60% of the dollar damages as opposed to the offer that would be made for a vehicle with a clean title.  So, if you do decide to purchase the vehicle, it's current value is between 40-60% of the blue book value for a private party sale of a vehicle with a clean title.

Many sellers just can't accept this fact.  I have a neighbor that is trying to sell a vehicle with a salvage title for 10% more than high blue book and won't budge (even without the salvage title, the vehicle would fall in the average to fair category because of other needed work).  Only about 5% of the used vehicles sold
by dealerships and used car lots are worth and sell for high blue book.

I would recommend that you take a "pass" on the Prius.

I hope that you have found this information helpful.  Please send me a follow up with any questions I can answer that might be helpful.
Your feedback by rating my response to this question will be appreciated.

Sincerely,
Bennie
San Francisco Bay Area