What Is A Rebuilt Car Title?

Dustin Hawley | Dec 21, 2020

If you’re shopping for a used car, you might have seen one advertised with a rebuilt title. This can be confusing if you’ve never seen it before. What exactly was “rebuilt,” the car, or the title? What does “rebuilt” even mean?

Here’s a quick explanation of a rebuilt car title and what it means for your potential purchase.

What Is A Rebuilt Car Title?

Why Do Cars Receive A Rebuilt Title? - Find the best car deals!

When you buy a vehicle from a dealership, it comes with something called a clean title, meaning that the car has never been totaled and that the odometer has never been rolled back. It also means that the vehicle has never been part of any manufacturer buyback, but that rarely happens.

Note that a clean title can still have a lien on it. A lien simply means that you cannot sell the vehicle until the lienholder has been paid.

This changes when a car is damaged by an accident, fire, flood, or other cause. If the car would cost more to repair than its value, it’s considered a total loss.

What Is A Salvage Title? - Find the best car deals!

A vehicle can also be “totaled” if repair costs reach a certain percentage of its value. The exact percentage rate varies from state to state but is usually around 70 percent.

Regardless of how exactly a car is totaled, it loses its clean title at this time. Instead, the state issues a new salvage title. This title is intended to warn buyers that the car is no longer safe to drive. A vehicle with a salvage title can’t be driven and, in most states, also can’t be registered.

In this case, the insurance company will sell the car off for scrap or to a buyer who wants to repair it. If the owner doesn’t have comprehensive insurance coverage, they’ll have to part it out, fix it, or sell it independently. This is the reason you see a lot of cars with salvage titles on sites like Craigslist.

If a car with a salvage title is repaired to a driveable state, it will receive a rebuilt title. Generally, it will need to undergo an inspection as part of this process to ensure that it’s safe to drive.

Keep in mind that this can also vary from state to state; different states have different inspection requirements, and a select few don’t require any inspection. When in doubt, research your local laws.

How Does A Rebuilt Title Affect the Value Of The Car? - Find the best car deals!

A vehicle with a rebuilt title will be worth 20 to 40 percent less than an equivalent car with a clean title in most cases. The exact value will depend on the car model, the type of damage it sustained, and the local automotive market.

Is A Car With A Rebuilt Title A Good Deal? - Find the best car deals!

It depends. A lot depends on local state laws. The more rigorous the inspection requirements, the more you can count on a rebuilt car to be reliable. If you trust the inspection process, you can potentially net some significant savings.

On the other hand, a rebuilt car title comes with some drawbacks. For one thing, if you don’t trust the inspection process, or if a good inspector has a bad day, you could end up footing the bill for some costly repairs.

Not only that, but the lower resale value comes with a downside; if you want to resell your car in the future, you’ll have to suffer the same 20 to 40 percent value loss due to the type of title.

What To Look For When Buying A Vehicle With A Rebuilt Car Title - Find the best car deals!

Before you do anything else, obtain a vehicle history report, either from your state’s DMV or from a trusted third party, and determine why the vehicle was salvaged.

Frame damage, in particular, is something you should think twice about. A dented or bent frame needs to be realigned, which requires significant metalwork and often welding. Needless to say, a poor mechanic can butcher the job, leaving you with underlying damage.

A misaligned frame puts significant strain on several of your vehicle’s systems. The drivetrain, brakes, and steering will all need to compensate. Not only that, but it can cause your tires to wear unevenly.

On the other hand, in some states, excellent vehicles can be salvaged if they’ve been abandoned. In this situation, you can get a pristine vehicle at a steep discount.

The next step is to find out where the car repairs took place. Find out if it was a reputable establishment or if the mechanic is known for cutting corners. With the proliferation of online reviews these days, that information is easy to find.

Similarly, make sure to review the repair records and receipts. This will allow you to verify the scope of the work.

If anything seems even slightly off, have the car inspected by a mechanic you trust. It’s worth spending tens of dollars on an inspection that could save you thousands in repairs later on.

Are Rebuilt Cars Difficult To Insure? - Find the best car deals!

Often, rebuilt cars can prove challenging to insure. Many insurers will not offer comprehensive coverage on rebuilt vehicles, only liability coverage. If you do manage to find comprehensive and collision coverage, you’re liable to higher premiums, as well as lower payouts.

The reason for this is twofold:

  • A car with a rebuilt title is less valuable, and therefore, the payouts are correspondingly lower.
  • There may be hidden damage that wasn’t found during the inspection. Therefore, there is an elevated risk of failure.

Summary

In summary, here’s what a rebuilt title means:

  • A car is initially sold with a clean title.
  • When that car is severely damaged, it is issued a salvage title.
  • The salvaged car is then repaired and inspected, and consequently, is issued a rebuilt title.

Whether or not that’s a good thing depends on your state laws, the individual vehicle history, your budget, and what you need out of your vehicle.

Want to learn more? Keep reading this site for more useful tips, tricks, and information.

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