Salvage/Rebuilt cars

[Kaplin261]

First I would like to state my wife wants a un-Mustachain type of SUV. We are close to FI and both have incredible jobs and have been very frugal for the last 10 years. We have no debt other than our mortgage. Our savings is primarily in our 401k's with the rest invested in our home. We are both in our late 30's.

The type of SUV my wife really wants in a Honda pilot or Toyota Highlander and she wants one that is new enough to have the lane sensing and crash prevention systems so year 2016+. New these vehicles are $35,000-$40,000 and in no way would I give my blessing to pay those types of prices for transportation. Even used these 2016 vehicles average around $30,000 still way to much money.

However I did find another option. Ebay has a few listing for Rebuilt titles vehicles that were deemed salvage after a accident and than rebuilt and put back on the road) Pilots and Highlanders going for $20,000-$25,000 still enough to make most mustachians give a facepunch.

Are rebuilt cars a good deal?

[zolotiyeruki]

I don't have personal experience with salvage/rebuilt cars, but yeah, a large SUV is almost always an automatic facepunch.  But before telling your wife that she's nuts, I think it's important to identify her motivations.  Why does she want such a huge vehicle?  Is she hauling 5 kids and 2 dogs, while towing a boat?  Given her desire for lane sensing, automatic braking, etc, could it be that she's motivated primarily by safety concerns?

[Thegoblinchief]

If you know what you’re doing or have a very trusted mechanic who can inspect for you, they’re often fine. Just keep in mind how much damage a car that expensive had to withstand in order to be totaled. Yikes. My experience has only been with salvage titled cares less than $5K.

Can’t  comment on the relevancy of safety features. The newest vehicle I’ve owned to date was 2000, so I’ve never even had a car with side airbags or ESC.

[radram]

First I would like to state my wife wants a un-Mustachain type of SUV. We are close to FI and both have incredible jobs and have been very frugal for the last 10 years. We have no debt other than our mortgage. Our savings is primarily in our 401k's with the rest invested in our home. We are both in our late 30's.

The type of SUV my wife really wants in a Honda pilot or Toyota Highlander and she wants one that is new enough to have the lane sensing and crash prevention systems so year 2016+. New these vehicles are $35,000-$40,000 and in no way would I give my blessing to pay those types of prices for transportation. Even used these 2016 vehicles average around $30,000 still way to much money.

However I did find another option. Ebay has a few listing for Rebuilt titles vehicles that were deemed salvage after a accident and than rebuilt and put back on the road) Pilots and Highlanders going for $20,000-$25,000 still enough to make most mustachians give a facepunch.

Are rebuilt cars a good deal?

So you are interested in a vehicle that had $35,000 in damage(the only way to be a salvage), and then had $15,000 in repairs (to allow profit to make fixing it worthwhile).

What is the $20,000 in repairs they skipped? Each car is different. I have my doubts.

[kendallf]

There's some irony in considering vehicles that have been wrecked and repaired for their collision avoidance features..

If you are very mechanically knowledgeable and have a clear idea of what damage was fixed (pictures, parts lists, etc.) and you are willing to live with an occasional quirk or problem due to extensive replacement and reassembly, salvage/rebuilt can be a deal.  Keep in mind for a nearly new vehicle to be totaled, the damage was probably extensive enough so that you are often essentially buying a vehicle that was assembled by hand, vs. the original assembly line in a factory with experts and QA. 

A few other things to consider:  Generally no financing will be available.  Some insurance companies will not insure salvage title cars as well, or will not insure them for comp and collision.  Zero warranty, of course.

[surfhb]

Although much of it is because of your hard work, you are both very fortunate to be almost FI at just a young age!   

Is there no way to get your wife away from the fact this is a financially bad purchase?   If, not just buy a good used SUV with cash and be done with it.    You 'll need to work a little longer but there's more to life than just being FI.

[acroy]

There's some irony in considering vehicles that have been wrecked and repaired for their collision avoidance features..

^^ lol I was thinking the same thing.

Avoid! If you are going to do it, do it right. It will be a better vehicle, may cost less to insure (I believe there are often insurance limitations on wrecked vehicles), and will be easier to sell when you figure out what an awful financial decision it was ;)

good luck!

[the_fixer]

I have purchased several at auction that I repaired and drove but I have trust issues and would only go that route if I were to do the repairs myself.

They all ended up being great but that is because I was able to look at the damage and repair it properly VS some person that is fixing it as cheap as possible to flip.

Personally I would pass due to resell and the unknown repairs.


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[Car Jack]

I have direct experience with this subject and will tell you to run.  In general, a salvage/rebuilt title car is worth no more than 60% of a clean title car and usually 50%. 

Why?

States have different ways to make a salvaged car into a registerable car again.  There are states (mostly in the south) where you walk into the DMV with a napkin that has written on it "I fixt dis car" and they'll give you a title.  In my state (Mass), it's a hugely rigorous process supervised and inspected by the Mass State Police.  Every single line on the insurance list of parts and repairs must be completed with receipts that get stamped by the officer.  Only then can a salvage title then be brought to our DMV and be converted into a rebuilt title.  For flood cars, every electronic component has to be replaced.  Every connector has to be either replaced or the pins removed and replaced on both sides.  This is a hugely expensive process for parts and time.  Expect a backwater state car too have nothing done to it and to have "latent defects" which means you get the car and it's great for a month.....then maybe the right rear window doesn't go down, then the radio doesn't work, then the engine won't start, then you have a lawn ornament.

[lbmustache]

What is the reason these are salvaged? Are these hurricane damaged cars that are flooding the market (ha)?

http://www.chicagotribune.com/news/columnists/wisniewski/ct-flood-damaged-cars-getting-around-0911-20170911-column.html

Cars soaked by floodwaters from Hurricanes Harvey and Irma will soon start appearing in the Midwest used car market, so buyers should beware, according to vehicle experts.
...

Flood damage is easier to conceal from an untrained eye than damage from a wreck, but it can be more devastating to the engine and other key components, said Christopher Basso, spokesman for the used car research firm Carfax. Flooding can destroy a car's electronic system, affecting safety features like air bags and anti-lock brakes, while rust can rot the vehicle from the inside, Basso said.

Why does your wife need/want a car that large (it does not sound like you have a large family to transport often?)? For what it's worth, you can get a brand new or slightly used Rav4 or CR-V with the same crash avoidance features for ~$25k. I personally am not a fan of salvage title vehicles, especially for newer cars with far more electronics to go wrong.

[Kaplin261]

I would like to add some information here. The salvage vehicles that we are looking at are being sold on ebay with sellers that have a reputable feedback score with experience flipping these cars. Resale value would be bad but the savings upfront make up for that.

I'm seeing honda pilots have about a 75% 10 year depreciation rate. So if I purchased a new Honda Pilot for $35,000 in 10 years I could expect to sell for $8,750 with a loss of $26,250 or $2,625 per year. If I buy a 2 year old rebuilt honda pilot for $20,000 and sell in 8 years I may only get $6,750 with a loss of $13,250 or $1,656 per year.

[surfhb]

I would like to add some information here. The salvage vehicles that we are looking at are being sold on ebay with sellers that have a reputable feedback score with experience flipping these cars. Resale value would be bad but the savings upfront make up for that.

I'm seeing honda pilots have about a 75% 10 year depreciation rate. So if I purchased a new Honda Pilot for $35,000 in 10 years I could expect to sell for $8,750 with a loss of $26,250 or $2,625 per year. If I buy a 2 year old rebuilt honda pilot for $20,000 and sell in 8 years I may only get $6,750 with a loss of $13,250 or $1,656 per year.

Never ever buy or vehicle without you or your mechanic looking it it first.   Are these Ebay sellers in your area?   

[ChpBstrd]

Yes, you might have more issues like squeaks and rattles, uneven tire wear, electrical component failures, etc. but you're talking a $15k difference here. You could employ a personal side-gig mechanic for that money. Suppose this goes as badly as possible. Despite you and a mechanic's inspections, the thing somehow blows both its engine and transmission the day after you buy it. You spend another $6k replacing those and then still decide to immediately resale for $4k less than what you paid. You still haven't lost $15k.

[moof]

Rather than ebay I would look locally.  Before buying a rebuilt car have a mechanic you trust not only due the usual used car checks, but also have them inspect the reported damage with extra scrutiny.  Don't buy a car without before pictures to help guide this.

The real fear is that a "rebuilt" car may be poorly rebuilt and may not perform the same as a new car if it gets in another accident.

Also, yes a face punch is in order for getting such a monster vehicle.  It is likely LESS safe than a decent sedan that costs half as much and uses half the gas.  So unless your wife is planning to take up off-roading or needs to pull a boat (double face punch) there should be no good reason to get such a beast.