The entire purpose of buying vehicles with salvage titles is to save considerable amount of money as these vehicles even after thorough repairs come for a significant discount of up to 40% off on the value of a similar model. Assuming most potential owners looking out for such discounted vehicles are not exactly rolling in cash, there will be every chance that they will seek finance for the purchase. However, due to the very special nature of these vehicles that have been written off by insurance companies, it can be quite difficult to obtain financing.
What Are Salvage-Title Vehicles
Salvage-title vehicles are those vehicles that have suffered damage to the extent that it is more worthwhile for the insurance company to write the vehicle off as a total loss rather than pay for the repairs. Typically such vehicles may have been involved in serious accidents, or have been exposed to natural disasters such as floods or storms. Many states automatically classify vehicles as salvage if the cost of repairs is more than 75% of their values. Another situation that may result in vehicles being classified as salvage is theft where the car is recovered after the insured has been paid off. Older vehicles may have suffered only slight damage but even then the cost of repairs may be higher than their book value and a savvy buyer can easily get vehicles that are in good condition. Even flood-hit vehicles may not require extensive repairs if they have been towed without an attempt to start their engines. Get more information on salvage-title vehicles by visiting http://idealautousa.com/.
Why Are Financing Companies Reluctant To Provide Finance to Salvage-Title Vehicles?
Finance companies can never be confident that the repairs have been carried out professionally and that the cars are mechanically and structurally safe to roam on roads. In an uncertain scenario the companies tend to play it safe and not expose themselves to the probability of loan defaults simply because the owner may find that the vehicle has broken down seriously due to the damage sustained earlier. In order to be sure, finance companies generally stay far away from salvage-title vehicles. Financiers are also chary of lending against salvage cars as owners usually find them difficult to dispose after owning the cars for some time. Car dealers also normally do not accept these cars for trade-ins due to the high perceived risk. In short the liquidity of salvage-title vehicles is not good.
How to Improve Your Chances?
Since there is no way you can hide the salvage-title status of the vehicle from lenders, your should essentially make sure that you are not buying a worthless vehicle and use the same expertise to demonstrate to the financier that they would not be financing a high-risk vehicle. You should get the car checked by a professionally-certified and independent mechanic that all the necessary repairs have been satisfactorily carried out and the vehicle is now completely safe and roadworthy. The previous owner or the dealer should be in a position to furnish such a certificate. Buying the vehicle from a repair shop that is licensed and reputed will provide further credibility.Make it a point to ask for the original invoices and documentation of the repairs to provide a clear trail of paper for the lender to examine.
How to Improve Your Chances of Getting Finance
Since salvage-vehicles are perceived as high-risk, there is no surefire way of guaranteeing a loan but it considerably bolsters the application if you have a very good credit score, as well as a clean track record of paying your dues. Finance companies will tend to view such applications favorably as they are being made by responsible citizens.The buyer should be able to document the vehicle’s history as well as repairs to conclusively prove the strength of the asset. The best lenders to approach are the ones that the buyer has already established a relationship with and both parties have come to understand and trust each other. If there is no previous relationship you can try and apply through an agent who carries some weight in the financing company. It helps a lot if you can provide documentation that shows an insurance company’s willingness to insure the vehicle.
Posts by SpeakBindas Editorial Team.