The prospect of buying a salvage titled car for almost half the price of one of its clean titled counterparts is tempting for many potential car buyers, but increasingly it’s becoming a losing proposition. I have bought and reconditioned a few dozen salvage cars (I currently own three). As I am getting ready to embark on a new car buying adventure, I sat back to look at the math for my current daily driver.

I purchased my 2005 Cadillac STS from an insurance auction a few years ago for about $3,400. After it arrived, I spent another $2,300 to repair it and get it back on the road. I went through the receipts a few months ago and wrote up a summary of the costs. It worked out to be a great deal for me at the time but now that I am getting ready to replace it, I decided to take a look back and see if I actually saved any money in the long run.

Prior to purchasing the Cadillac I spent about a year in a very basic Mitsubishi Lancer. I was spending a lot of time on the road doing some consulting work, so I picked up the Lancer at auction for about $2,000 for the sole purpose of having something cheap and fuel efficient. Once I settled for a local job that was not far from home I decided to reward myself and get something a bit more comfortable. I sold the Lancer for $2,800 and had another $3,500 saved up to get a replacement car. I had previously flipped a Cadillac CTS and found that it was something I enjoyed driving, but it felt just a little too small for me. I decided to go on the hunt for its bigger brother and started looking at all the versions of the STS, eventually resolving to look for a V6 RWD model. As I looked at local ads, I found that a clean example of a 2005 or 2006 model could be found for a little over $10,000. Since that wasn’t in my budget, I’d have to use my insurance auction membership and hunt out a deal.

Joining one of the insurance auctions is necessary to buy one of these cars directly and comes with a fee of $200 which should be added to my purchase cost of the Cadillac for a true comparison. I was already a member of two of the largest auction houses and had an advantage as I had bought and sold vehicles there previously. If you look at my post on the process of buying and repairing the vehicle you will see I ended up at a grand total of $5,700 to have it back on the road — with the $200 auction registration — bringing the grand total to $5,900. That seems like a decent deal since it’s ended up at 60 percent of the price of a comparable clean titled one. The only way I was able to attain such a price was due to my access to a shop where I could store the car for a month while I worked on it, having about 10 years of experience in repairing cars and two large toolboxes full of tools acquired over that period of time. Jack detailed these advantages a few months ago and in my case I am able to tick off most of the boxes on his list. Along with my knowledge and tools I also had a backup vehicle and did not have to pay a mechanic $75 to $100 per hour to complete the repairs.

I didn’t take an exact count of the time I spent on repairs on the vehicles, but I am sure that between the four of us that worked on it we chalked up at least 100 hours. Sending the car to a local mechanic that charged $75 an hour would bring the labor bill to $7,500 and cause my total to run up to $13,200 which would actually cost more than many of the clean titled examples available at the time. This explains why the car ended up at the insurance auction in the first place. Since it was only a perceived expense we will not count it in. In comparison, buying the clean title example at the time may have lost me a few hours here and there to do some maintenance, but my crew and I would have the remaining 95 hours to spend as we pleased. Over the past 27,000 miles I have had a few more items that needed replacement including wheel bearings, a steering rack, some struts and a control arm. The wheel bearings and steering rack are fairly common issues on these cars and are unlikely an issue of the accident that the car previously suffered. The control arm and struts are not common issues and appear to have worn prematurely due to the previous accident history. I bought the control arm for $80 from a recycling yard and picked up the struts on Amazon for about $220. This brought my running total for the car to $6,200. I spent more money on the maintenance of the car, but that would have been spent of the clean version as well, so we will not count that in for the purposes of our initial comparison.

The final tally of $6,200 still left about $3,800 in my pocket over the clean titled option. If I planned to drive the car into the ground it may make sense, but now that I am getting ready to sell it the story is a bit different. I started my most recent research by looking at the Manheim Market Report or MMR. This report details recent sales prices of cars at their dealer auctions. I found that an average clean titled STS similar to mine is currently selling for about $3,800 while the rough and salvage titled examples are selling in the $1,700 range. These were my starting figures for setting a sale price. I also decided to take the car to CarMax just to have a figure for comparison and they came back with an offer of $1,400 to buy the car. The offer came back within my expectations as I have found they usually come in at around 80 percent of the MMR value. Taking a clean titled version to CarMax would have likely netted me an offer closer to $3,000. I checked some of the current ads and recent eBay sales and noticed clean models going for about $4,500 while salvage titled models are selling for about $2,000.

I will likely spend more time trying to sell this car since it has the salvage title and will likely get about $2,000 for it. This will bring my total ownership cost down to $4,200 while the clean example could be sold for $4,500 bringing that ownership cost to about $5,500. In the long run I will have saved $1,300 by purchasing the salvage titled vehicle, but that comes on the back of spending many hours under the hood of the car that I could have used for leisure or an enjoyable hobby and looking at the big picture I no longer find that it was a valuable use of my time. We can add another facet to this discussion by adding the overall maintenance costs. I estimate that I have spent an additional $1,600 for tires, brakes, steering and suspension maintenance which brings my true cost of ownership to $5800. I have driven the car for about 25 months, so my monthly cost will end up at $232 if I am able to sell it in the next few weeks. Seeing this number in front of me, along with some clear editorials by lease proponents, has pushed me to look at leasing a car. Leasing used to be a blasphemous term in my car buying discussions, but when you consider that you can get a brand new sedan with better fuel economy, more power and a warranty for the same monthly cost as what I spent on the Cadillac, it becomes a worthwhile consideration.

My current state of mind is in two camps. One is telling me to lease something decent and somewhat sporty that I can get for around $300 and enjoy it for a few years without worry while the mischievous side of my mind is telling me to pick up one of the fun cars that I have always thought about like the Pontiac G8 GT or the Saab 9-3 Turbo X. Both of these can be found in pretty nice condition for about $15,000, so it will be something to ponder. If I do decide to buy the G8 or the 9-3 they will surely be clean titled cars because they will be easier to finance and to sell once I eventually decide to move on. I am lucky due to the fact that I have a beater truck as a backup vehicle and a never ending project car for fun, but in the end I want to have a daily driver that puts a smile on my face when I get behind the wheel in the morning.