When buying a used vehicle, you can come across one with a rebuilt or salvage title. Although these vehicles can be a good fit for the right buyer, it is important to understand all aspects of them before deciding to buy or move on.

what does it mean to have a salvage title or a rebuilt title?

To help you better understand what Each title means, here is an overview of the two:

What is a salvage title?

a salvage title is designated when the costs of repairing the vehicle outweigh its market value and the vehicle is considered total. This normally happens when an insurance company has written off the vehicle. Some of the most common reasons a car might have a salvage title are accidents, weather (especially flooding), or theft of the car. Vehicles that have received a salvage title may not be safe to drive due to the danger posed by its damage.,

What is a rebuilt title?

when a car with a salvage title has been repaired, it can receive a rebuilt title. This informs the buyer of the previous history of the vehicle. To receive a rebuilt title, he must undergo a series of tests to ensure he is safe to drive in certain states. However, in other states, it may not be necessary to inform potential buyers of the vehicle’s history.

how does a car get a salvage or rebuild title?

If a vehicle sustains major damage with repairs totaling between 70-90% of the car’s value, the insurance company will consider the car a total loss. Once this determination has been made, a state motor vehicle agency changes the title of the car from clean to salvage or junk. After receiving a salvage title, you cannot drive, sell, or register the vehicle until it has been repaired.

At this point, the salvage vehicle is usually sold by the insurer to a third party interested in repairing the vehicle or breaking it down for parts., If the vehicle is repaired, it will need to meet safety requirements before receiving a title reconstructed by the Motor Vehicles Agency. By giving the repaired vehicle a rebuilt title, it says more about the car’s history.

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How does a rebuilt title affect the value of a car?

a vehicle with a rebuilt title is likely to be worthless because it has sustained significant damage., Compared to similar models with clean titles, a car with a rebuilt title could be 20-40% less valuable, which potentially represents thousands of dollars.

Should you buy a car with a rebuilt title?

It depends on your situation. On the one hand, it might be a bargain. In some states, vehicles must pass rigorous inspections to receive a rebuilt title. And because the vehicle had a salvage title at one time, the resale value could be much less. That means you could save significantly.

that said, there might be some downsides. Just because it passed state inspection doesn’t mean the car is guaranteed to be safe for the long haul. In addition, it could be difficult to insure your vehicle. And coming back to value, while you might get a deal to buy it, if you plan to sell it at some point, you won’t get as much as you would from a car with a clean title.

obtain insurance with a salvage or rebuilt title

Salvage title insurance can be difficult to find as the vehicle, in many cases, is not safe to drive. However, rebuilt title insurance is easier to obtain, but certain stipulations will apply always.

even after necessary repairs, some insurers will only offer liability coverage. Most insurance companies will not extend full coverage for salvage rebuilt cars because it is difficult to assess all of the pre-existing damage the vehicle has sustained. Collision and comprehensive coverage are unlikely to be offered with this type of title.

If an insurer offers collision and comprehensive coverage, you can expect a lower insurance payout in the event of an accident or incident., since a rebuilt title means the vehicle is no longer in its pristine and undamaged condition, its value is much lower. Because there may be undisclosed or unseen damage in a rebuilt vehicle, insurance companies will also consider this type of title to be more likely to pose a risk on the road.

What are the pros and cons of having a salvage or rebuilt title?

Buying a car that’s already damaged can be a risky move, but if you know what you’re doing it could also be a smart move., One advantage of cars with a salvage or rebuilt title is that they usually cost a lot less than vehicles with proper titles. Salvage or rebuilt vehicles typically cost 20 to 40 percent less than the same type of vehicle with a clean title, according to Kelley Blue Book.

on the other hand, buying a car with a rebuilt title can lead to higher costs in the long run if the repairs carried out were not up to par. When you purchase a rebuilt salvage vehicle, you accept that significant damage has been done to the vehicle. In some cases, there may still be undisclosed or unseen damage that could occur again.

likewise, even if the vehicle has been fully repaired, you may have trouble finding insurance for the car. In many cases, carriers that insure cars with a rebuilt title will charge the same premium as a similar car with a clean title, even if your vehicle is worth much less.

Frequently Asked Questions

What is required for my car to earn a rebuilt title?

each state has its processes in place, some more stringent than others. The best approach is to contact your state’s Bureau of Motor Vehicles to learn the process of obtaining a rebuilt title.

is a titled salvage vehicle right for me?

If you’re an experienced mechanic or know someone who can do a great job on the cheap, then a titled salvage vehicle could be a great buy.

What should I look for when buying a vehicle with a rebuilt title?

First, check the vehicle history to determine what caused the salvage title status. In some states like Ohio, something innocuous like an abandoned vehicle could earn salvage title distinction.

then see if you can determine who did the repair work. Research them online, noting Google reviews, their top rating from the Bureau of Business Affairs, and your state’s Attorney General’s Office to see if they do a quality job. Doing these things will help you better understand what you are dealing with for this vehicle.