Can you finance a salvage title car?

Who will finance a salvage title car?

It’s almost impossible to finance a salvage title car with an auto loan. Very few lenders offer auto loans for financing salvage title vehicles because your salvage car is already considered a total loss by the insurer, which will make it difficult for the lender to resell if you default. 

Many banks won’t give loans for salvage title cars, either. You’ll usually need to approach smaller lenders or credit unions in your state, and even then, it’s not guaranteed. 

Although a salvage title car may have a lower upfront cost, savings can be offset by hidden expenses like replacement parts, towing, and inspection and rebuilt title fees if you want to make the vehicle roadworthy again. You can learn more about the costs in our guide to buying a salvage title car. 

It’s easier to pay in cash, but if you need to get a loan for a salvage title car, we recommend securing a loan from one of the providers below.

Lightstream, a division of Truist Bank, is an online lender that offers a variety of fixed-rate, unsecured personal loans with loan amounts ranging from $5000-$100,000. This bank only approves good to excellent credit scores.

Interest rates are determined according to the purpose of the loan, the loan amount, and the payment method.

Can a personal loan finance a salvage title car? 

You can use a personal loan to finance a salvage title car. If you have a bad credit history, you risk not getting accepted.

Other loans are available, but they come with their own risks.

Title loans

If you have another vehicle, you can borrow against its title and use it as collateral to purchase your project salvage title car. Loan amounts are determined by the value of your car. However, interest rates are notoriously expensive on title loans, with some average APRs hitting up to 300%. If you default, you risk losing your vehicle.

Home equity loans

If you own your home, these loans allow you to borrow against its equity. Home equity loans are usually used for large expenses and often come at a fixed rate, but they can be stricter than personal loans. If you have little equity, existing debt or a poor credit score, you’re unlikely to be accepted.

Auto loan vs. personal loan

Auto loans use the vehicle you’re financing as collateral. If you default, the lender can repossess it. Interest rates are often lower as there’s less risk for the lender, but full coverage insurance is usually required. This is why it’s so difficult to find auto loans for salvage cars. Very few providers are willing to insure them, or coverage is limited. To learn more about insuring a salvage car, visit our blog. 

Personal loans can be used for just about anything, and they’re usually unsecured. As no collateral is required, this means they’re easier to secure. However, there’s more risk for the lender, and you’ll have to pay higher interest rates. You can expect higher barriers to acceptance, including a good to excellent credit score. 

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