Let’s say you find a vehicle that has low miles, isn’t all that old and seems to be in good shape, but the price is suspiciously low. There’s a good chance it has a rebuilt title—but what is a rebuilt car title?
What does rebuilt title mean?
A rebuilt title is the title brand assigned to a salvaged or repaired vehicle, complete with inspection and certification that it’s legal to drive again. These vehicles are legal to sell, own and drive, although there may be some risks that go with that down the line.
Rebuilt title vs. salvage title
A salvage title refers to a vehicle that was in a collision or incurred some other type of damage and the insurance carrier decided that the repair bills would be greater than a percentage of the book value of the vehicle. In other words, a salvage title means the vehicle is financially considered a total loss. Contrary to what people might think, this is calculated as a percentage of the vehicle’s total value. In most states, that number is around 70%.
A rebuilt title means the vehicle was considered totaled, but someone decided to do repairs to get it back to drivable condition. That doesn’t mean, however, the vehicle is free of any lingering problems. A vehicle with a rebuilt title will probably sell for 20-40% less than a comparable vehicle with a clean title.
Why do cars get rebuilt titles?
In many cases, the damage might have been purely cosmetic. Because the repair costs only need to exceed a percentage of the vehicle’s market value, a car can become totaled more easily than you might expect. If a car is older, carries a high mileage or was never worth that much to begin with, an insurer doesn’t need to see catastrophic damage to write the vehicle off.
In those instances, it makes good sense for someone handy to replace the wrinkly body panels, apply some paint and get the vehicle back in good shape again.
Pros and cons of rebuilt title vehicles
A rebuilt title isn’t necessarily a green light to purchase a vehicle—but it isn’t always a blinking red light, either.
Pros of rebuilt title cars
The damage may be negligible
Body work is notoriously expensive, and on a vehicle more than 10 years old, a collision estimate can quickly outweigh whatever that vehicle is worth. At the same time, the vehicle may have come away from the collision with no electrical, suspension, braking, steering, frame or mechanical damage.
It’s almost certainly going to cost less
As mentioned, the asking price for a vehicle with a rebuilt title can be 20-40% lower than something comparable. The buyer has more negotiating power in these situations because they’re willing to buy a car that (relatively) few others would consider. Private buyers are most sellers’ only option, because it’s unlikely a dealer or other wholesaler would be able to turn a profit on the car.
It’s most likely safe to drive
Depending on how stringent your state’s inspections are, a car with a rebuilt title is probably going to be roadworthy—it’s the only way for it to earn the rebuilt status. You should still have it inspected by a mechanic before you pull the trigger, just as you should for any used vehicle.
Cons of rebuilt title cars
Insurance might be a problem
This might depend on other factors, too, such as your age and driving record, but sometimes insurers will balk at policies for vehicles with salvaged or rebuilt titles. They’re considered high risk, and you might not be able to get full coverage and collision insurance. That said, full coverage is typically only required for cars that have liens.
Financing might be difficult
Taking out a loan for a vehicle with a rebuilt title could cost you. The bank might ask for a hefty down payment or stick you with a higher interest rate. Not only does paying in cash avoid these issues, you might be able to negotiate a better price on the vehicle.
Problems might present themselves later
This all depends on the kind and extent of damage on a vehicle, but things that weren’t detected at the time of purchase can show up 10,000 or 20,000 miles down the road. A collision might damage or weaken parts in the drivetrain, such as the U-joints, differential, driveshaft, flywheel/flexplate and transmission, but they might not fail until sometime later. This is a calculated risk for any used vehicle with a rebuilt title.
Resale might be tough
When you noticed the car had a rebuilt title, you (hopefully) did your due diligence and held firm to a fair price well below the market value for a comparable car with a clean title. You should expect future buyers to do the same, and the car is now another owner and however many years and miles removed from being new. All cars depreciate in value, but if you’re buying a car with a rebuilt title, you should expect to own it for the rest of its life or take a loss if you decide to sell it.
Things to keep in mind when considering a rebuilt title car
Now you know more about what a rebuilt title means and what to expect when you find a vehicle with one. Here are some things you should probably keep in mind:
Ask for documentation
Any rebuilt car should have an extensive list of repair documents. Receipts for new parts, inspection papers and \body shop or mechanic’s records should all be available, or you should at least be able to talk to the shop that did the work. If the seller isn’t forthcoming with this information, that’s not a good sign and you should probably move on.
Find out the extent of the damage
A fender bender or hail damage isn’t such a big deal. A car that was T-boned or rear-ended by someone going 40 mph is a different story. Worse still is a vehicle declared a total loss because of fire or flood damage. These vehicles are just about always a bad bet. For flood damage, look for mold, a mildew smell, sand or mud in the carpeting or under the seats, exterior signs of water damage such as water or fogging in the headlight housings, rust or flaking on a newer vehicle.
If you have suspicions of flood damage, find out where the vehicle came from and if the area was struck by a hurricane or flooding. Flood damage will just about always result in electrical problems and mechanical issues down the line because flood water can infiltrate gaskets and seals and make its way into the transmission, differential and engine. Fire, especially an underhood fire, is usually a deal breaker. You should run, not walk, from a vehicle that has had fire damage.
Get an independent inspection
This is really part of your due diligence on any vehicle purchase, but especially on a heavily damaged vehicle. A state inspection is one thing, but a good mechanic will know what to look for and go a lot deeper than a state safety inspection will. Be sure to let them know the car has a rebuilt title and why.
Do a test drive
This is again true of any car purchase, but take that vehicle out for a good test drive. Accelerate sharply and listen for any weird noises or irregularities in the engine and transmission. Hit the brakes and see if the vehicle vibrates or dives to one side. Take it out on the highway and see how it performs at higher speeds. Make sure the horn, headlights, taillights, electrical accessories and everything else are working.
If you’re looking for a vehicle and don’t want to spend a lot of money, a rebuilt title car can be a great value. Just make sure you do your homework beforehand—if the vehicle hasn’t had any serious damage and was still declared a total loss, you could end up with a pretty solid ride.