The Arizona Department of Motor Vehicle (DMV) states the following about the types of inspections that are done on motor vehicles.
Level I - Level I inspections are for out of state vehicles and bonded titles. It is an inspection to match the vehicle identification number (VIN) to the vehicle ownership documents to verify the identity of the vehicle. Most vehicles are successfully inspected and verified at this level. A Level I verification is conducted by an MVD officer, an authorized Third Party employee, or a designated peace officer. There is no fee for a Level I inspection conducted at an MVD office.
Level II - A level II inspection can only be performed at an enforcement office. Level II inspections consist of matching the public vehicle identification number, a secondary vehicle identification number and the confidential vehicle identification number to the vehicle ownership to determine the identity of the vehicle.
[Let CarInsurance.com help you find affordable auto insurance now.] Inspection is conducted when unusual circumstances indicate that a secondary VIN should be examined. A Level II inspection is conducted by a specially certified MVD officer. The fee is $20 and if a new Arizona number needs to be assigned, a $5.00 fee will be added. Appointments are recommended, but not required. The AZ DMV notes that you should see an enforcement office location for more details about a Level II inspection.
Level III - A Level III inspection can only be performed at an enforcement office. A Level III inspection consists of a Level II inspection plus verification of vehicle identification numbers on, at the discretion of the inspector, some or all component parts to determine the identity of the vehicle and that the vehicle is properly equipped for highway use. Level III inspections could occur when a vehicle is restored salvage, or a recovered stolen vehicle or has been involved in a collision.
Level III Inspections are conducted by specially certified MVD officers for restored salvage vehicles, by appointment only. The fee is $50. If a new Arizona number needs to be assigned, a $5.00 fee will be added. Level III Inspections are by appointment only. You will need to call ahead to schedule an appointment.
The Arizona DMV states that to get a restored salvage title complete a title application, make an appointment to have a Level III inspection conducted, obtain an emissions compliance certificate (if applicable), surrender the salvage title with the application and pay a $4.00 title fee - plus registration fees (if applicable).
In AZ a Salvage Certificate of Title is issued to a vehicle that was stolen, wrecked, destroyed, water damaged or otherwise damaged to the extent that the owner, leasing company, financial institution or insurance company considers it to be uneconomical to repair. While a Restored Salvage Certificate of Title is issued to a vehicle that has been rebuilt or restored to operation.
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For proof of ownership for a salvage vehicle one must show addition to the title, you must show receipts, invoices, bills of sale or other ownership documents for component parts used in the vehicle repair process.
Each receipt must include: Description of the vehicle from which the parts were removed, including vehicle identification number (VIN), year, make and model. Name, address and signature of the company or person who sold the part. Driver license number of the seller (if private party) or the tax identification number (if a company). And, the Title Number for the Certificate of Title.
Since the Arizona DMV notes that a recovered stolen vehicle may have to undergo a Level III inspection you may want to contact the enforcement office location you plan on taking the vehicle into for the inspection to find out for certain if it is a Level II or Level III inspection you will need have on the car. | 
