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People trade in their cars to dealerships all the time. However, trading in a totaled car is a little different. Here’s what you need to know about trading your totaled car at a dealership.

Can I Trade in My Totaled Car to a Dealership?

While you can trade in a totaled car to a dealership, not all dealerships accept totaled vehicles. Most auto dealerships specialize in buying and selling drivable vehicles, which makes cars that need expensive repairs more difficult to deal with.

Some dealerships accept totaled vehicles. However, you may be offered a lower trade-in value for the vehicle than you would receive if you were selling it in other places. Make sure you shop around to ensure you’re receiving the best quote.

Understanding Totaled Cars and Dealerships

When you have a totaled car, there are a few things you need to know. Dealing with a totaled car is similar in some ways to dealing with a new or used car, but there are major differences that set them apart.

What is the Insurance Company’s Role in Totaled Cars?

When it comes to car insurance companies and totaled cars, you will have 2 options. When a car is totaled, a claim must be made with the auto insurance provider. Once the claim is made, your auto insurance company will need to know if you are going to accept a full or partial settlement.

If you decide to accept a full settlement, you will have enough money to replace your totaled car with the same type and model car as your totaled car. Also, when you accept a full settlement, you will sign the car title over to your auto insurance provider and will no longer be responsible for the car.

In a partial settlement, you will keep your totaled car and your auto insurance provider will pay you the value of the vehicle minus the depreciation. You would choose this option if you want to repair your car and obtain a rebuilt car title or possibly sell it to an auto dealership.

Dealership Policies on Totaled Cars

Most dealerships don’t have a policy that pays off totaled cars. However, if you obtain gap insurance from your auto insurance provider or lender, you will be able to cover the difference between your car’s actual cash value and the amount you owe on your loan or lease. Having gap insurance can help you avoid paying out of pocket for a vehicle you no longer have.

Trading in Your Totaled Car

Trading in your totaled vehicle has upsides and downsides. Let’s take a look at both the pros and cons.

Pros of Trading in a Totaled Car

The advantages of trading in a totaled car are as follows:

  • The process is often quicker and easier than selling your vehicle outright
  • You may be eligible to use the trade-in value towards the purchase of a new car
  • The dealership will handle any necessary repairs and upgrades
  • You can use the trade-in amount as the down payment on your new car
  • You may be able to receive tax advantages, as most states require the payment of sales tax on the difference between the price of the vehicle you trade in and the vehicle you’re purchasing, not the full price of your next vehicle.

Cons of Trading in a Totaled Car

The disadvantages of trading in a totaled car are as follows:

  • You will receive less money for your vehicle if you trade it in
  • You may feel as if you have less control of the deal
  • Any money you may have spent on repairs is NOT considered
  • Your local auto dealer may not want or need your vehicle
  • You are limited to the inventory of your local auto dealer

Alternative Options for Your Totaled Car

Dealing with a totaled car can be frustrating, and that’s an understatement. You have a few different options when it comes to dealing with your totaled car.

Selling Your Totaled Car Privately

In most states, you can legally sell a totaled car. However, it is your responsibility and legal duty to disclose that the car you’re selling has been deemed salvaged. Failure to do so will likely result in fines and possible charges. If you decide to sell your car in a private sale (a sale between two people and not between an individual and a business) try to disclose as much information as possible about the vehicle.

Selling Your Totaled Car for Parts

You can also sell your car for parts. When you part out your car, you remove the most valuable, in-demand car parts and sell them. You can hire a mechanic to help you sort everything out. Parting out your car is one way to make the most money from selling your totaled car.

Selling Your Totaled Car to a Junkyard or Salvage Yard

If you don’t want to go through the hassle of repairing your car and getting a rebuilt car title, you can sell your totaled car to a junkyard or salvage yard. You’ll need the car’s title, but that’s about it. You will no longer have to worry about paperwork and being liable for anything that happens with the car.

Navigating Auto Insurance Claims and Settlements

When it comes to auto insurance claims and settlements, you’ll need to know about GAP insurance and a few other things.

GAP Insurance and Its Benefits

GAP (Guaranteed Asset Protection) insurance is not mandatory. This optional auto insurance coverage applies if your vehicle is stolen or deemed a total loss. This insurance covers the difference between the amount you owe on your car loan and the actual cash value of your vehicle.

The Advantages of GAP Insurance

There are many advantages of GAP insurance. With GAP insurance, you will have the following benefits:

  • You have added protection in the event your vehicle gets totaled in an accident
  • The price of GAP insurance isn’t expensive
  • You’ll have peace of mind
  • This insurance covers worst-case scenarios
  • Offers flexible payment options
  • Expedites the replacement process of your car
  • Some lenders or leasing companies require you to obtain GAP insurance (this helps protect them from vehicle owners who walk away from a loan or lease if the car is totaled or stolen.)

Negotiating with Your Auto Insurance Company

When negotiating with your auto insurance company, make sure the solutions provided are reasonable for your specific situation. Address your needs and concerns, and allow your auto insurance provider to inform you of what they can do. The idea of negotiating is for both parties to find common ground.

Salvaged vehicles are vehicles that have been declared a total loss by a car insurance company due to theft or damage. There are legal considerations that buyers and sellers of salvage cars need to know.

Understanding Salvage Titles

Salvage cars are issued salvaged titles by the state’s DMV or the equivalent. Salvage titles indicate that a vehicle has been stolen or damaged to the point the auto insurance company declares it a total loss. Salvage titles are important because they inform potential buyers that the vehicle has a history of extensive damage and that the car may have been rebuilt or repaired.

As we previously stated, if you plan on selling your salvage car, whether you repair/rebuild it, you must disclose that the car you’re selling has a salvage title.

Obtaining a Salvage Title

Before you can obtain a salvage car title, your vehicle must meet the state DMV’s definition of a salvaged car. Salvage car definitions can vary from state to state. Most states require a car’s damages to exceed at least 70% of the car’s actual cash value (ACV) to be deemed a salvage. You can check with your local DMV or your state’s equivalent for specific salvage car rules and regulations.

State Regulations and Total Loss Laws

Total loss vehicles are vehicles that need repairs that would cost more than its actual cash value or the state’s value threshold. Insurance companies pay the policyholder the cash value of the vehicle, minus the deductible, if the policyholder has collision and comprehensive coverage. The regulations and total loss laws vary by state, so we’ll give you a general run down about standard practices for total loss vehicles.

Total loss vehicles can’t be driven legally, so you won’t be able to obtain an auto insurance policy for them. Auto insurance companies must declare a vehicle a total loss if the damage costs at least $7,500 to repair. In order to receive an auto insurance payout for a total loss vehicle, you are required to carry either property damage liability or collision or comprehensive coverage on your auto policy.

Your auto insurance company must provide you with a written notice that explains total loss, such as how vehicle values are determined and what to do if you do not agree with an auto insurance provider’s offer.


Can You Buy Back a Totaled Vehicle?

Sure you can! First, you need to make sure your state allows you to buy back a totaled vehicle. Then you need to negotiate with your auto insurance provider about your car before the insurance company sends it to the salvage yard. Keeping a totaled vehicle means you must get the car inspected and obtain a rebuilt car title.

You may have difficulty insuring your rebuilt car and you won’t be able to obtain a full coverage auto policy on a rebuilt car. If you don’t plan on driving your totaled vehicle, you can use it for parts, sell it to someone, a junkyard, or a scrapyard, or donate it.

Will A Dealership Take a Rebuilt Title On Trade-In?

A dealership may accept a car with a rebuilt title as a trade-in. However, you should have realistic expectations. The dealership will likely give you a low offer because they plan on sending the car to auction.

Will A Dealership Take a Salvage Title On Trade-In?

Some dealerships will accept a salvage title on trade-in and other dealerships won’t. Dealerships, such as CarMax may be more willing to accept a salvage car than other well-known dealerships. Because salvage title cars have little to no value, most dealerships do not accept them.

The bottom line is that you can trade in your totaled car to a dealership. You have to find a dealership that will take your totaled car. Before you take your car to a dealership, shop around and find a dealership that will give you the best deal.

Good luck trading in your totaled car!