U.S. Vehicle Titles: Clear Title and Salvage Title, Explained

Before buying a car from an online auction, it’s important to check what type of title is assigned to the vehicle. There are multiple types of titles, but we’ll break down the two most common to understand for auctions – clear and salvage.

Vehicles with clear titles have never been deemed a total loss by an insurance company. For IAA vehicles, this usually means the car needs some repairs, but the repairs should not be more than what the vehicle is worth. Dealers often like clear-title vehicles because they can make the repairs then turn around fast and sell them for a profit.

A salvage title is issued when an insurance company says a vehicle needs more repairs than the car is worth, making it a total-loss vehicle. This usually happens because of a significant incident, collision or deterioration. Stolen or abandoned cars may get a salvage title even if there isn’t much damage, depending on state regulations. Vehicles with salvage titles often have a lower purchase price than clear-title vehicles, but buyers should know that you may not be able to receive an auto loan to buy a salvage-title vehicle because of its condition.

And here is something else that’s important to know – you can’t just repair a vehicle with a salvage title and then immediately put it on the road. Each state has its own requirements to get a rebuilt or restored title for salvage-title cars. Buyers will need to check with their state regulations to know whether a rebuilt salvage vehicle can be sold and/or driven legally. These are the main reasons salvage-title vehicles are often purchased by licensed scrappers, dismantlers and recyclers.

A helpful auction company will provide information readily available to buyers so they can determine if they are eligible to purchase salvage- and/or clear-title vehicles at auction. We previously mentioned each state having its own regulations, and that information is especially important for unlicensed – or public – buyers to review before purchasing. Some public buyers opt for having a broker facilitate the purchase of a vehicle if they’re not independently eligible.

Most auction companies include the title type a vehicle has before it goes up for auction. After the sale, customer service representatives work with buyers to get sale documents and titles. With most auctions now being online, buyers can now choose how they want to receive documents after the sale including the title. There may be an unexpected issue with titling at some point – possibly a title was missing when the auction company received the vehicle in its lot – but the auction company will work with you to have the issue resolved as quickly as possible.

No matter which type of buyer you are, considering what type of title comes with a vehicle should be an essential component of how to put together your bidding and buying strategy. 

To begin participating in online car auctions, register for an IAA account with our simple online registration process. If you're already an IAA member, log into your account and find your next vehicle. 

Was this article helpful? Check out some of our other educational content regarding online car auctions. We’ve previously hit on various topics, including who is eligible to buy, the need to build a sound bidding strategy, and the importance of conducting research prior to auctions.