Buying a rebuilt car title can be a tricky process. There are many variables to consider, and it’s important that you understand the risks before making your purchase.
Find out how cars with salvage titles and rebuilt titles differ and what you need to know if you plan to purchase a vehicle with a rebuilt title.
- The meaning of a rebuilt title or salvage title varies depending on your state.
- Most states require the vehicle to undergo inspection before it is allowed to return to the road.
- Before buying a car with a rebuilt title, check if the car can be insured with your insurance provider.
- Many auto insurance providers don’t offer insurance for vehicles with rebuilt titles.
What is a rebuilt title?
A “rebuilt title” is a rebuilt or reconstructed vehicle that an insurance company previously designated as a total loss, usually due to an accident. A rebuilt title might be given to a car subsequently repaired and restored to operation.
These vehicles are often severely damaged before they are rebuilt and refurbished parts may be used during reconstruction. In most states, an inspection of the vehicle is required before the vehicle is allowed to return to the road.
Rebuilt title vs salvage title
Normally, a car becomes a salvage vehicle after an insurance company has declared it to be a total loss after an auto accident. The total loss threshold, or formula used to determine if a car is totaled, varies by state..
Generally, a salvage vehicle cannot be driven on the highways or have a valid license plate. A salvage vehicle must be repaired to become a rebuilt, roadworthy vehicle.
If a car with an old salvage title is repaired, it will be given a rebuilt title. However, it generally needs to go through inspection before being deemed safe for the road. Once it passes the safety test, it can be considered a reliable vehicle.
How does a car get a rebuilt title?
Sometimes, a salvage vehicle is sold to a third party that either repairs or dismantles it. If the salvage vehicle is repaired, it is then given a rebuilt title. It usually undergoes inspection before the vehicle is permitted to go back on the road.
Should I buy a car with a rebuilt title?
It’s always dicey to buy a car with a rebuilt title, as it comes with its own set of risks. You never know what you’re going to get, and it could end up costing much more than buying a vehicle without a rebuilt title.
However, if everything goes well and nothing terrible happens along the way, buying a car with a rebuilt title can prove to be a good investment, as it might be much cheaper than buying a vehicle without a rebuilt title.
Pros and cons of buying a car with a rebuilt title
Buying a car with a rebuilt title might not be a bad idea. It has its pros and cons and some of them are mentioned below:
Pros:
- Costs less: A rebuilt-title car costs much less than a car of the same model with a clean title.
- Manageable damages: The car may have repairable damages, and if you have enough money in savings and are willing to put up with an old car that’s structurally sound, it might be worth a shot.
- Affordable temporary solution: If you need a car for a short period and are not willing to invest a good sum of money in buying a new car, the one with the rebuilt title can be a helpful temporary solution.
Cons:
- Possible hidden damage: It may have hidden damages that weren’t apparent during the initial inspection. Things can go wrong with a vehicle, even if it appears perfect on paper and in person.
- Difficulty in getting insurance for rebuilt title: A rebuilt title can make it difficult to get insurance.
- Not easy to sell: You may have difficulty selling your car with a rebuilt title. Even if you succeed in selling it, you may not be able to get much money for it.
How much does a rebuilt title affect value?
A car with a salvage title is typically worth 20% to 40% of the Kelley Blue Book Value, according to KBB. However, the exact price of a car with a rebuilt title will depend on many factors, including the model and what kind of damage it sustained.
Learn about the values of vehicles with rebuilt titles vs. clean titles
Can you get insurance for a rebuilt title?
You can get rebuilt title insurance, but it is tough to find insurance carriers to provide coverage for cars with a rebuilt salvage title. Insurance companies often charge rebuilt title vehicle owners with higher premiums than for the same coverage on a vehicle with a clean title.
Can you get full coverage on a rebuilt title?
It is possible to get full coverage insurance for a rebuilt vehicle, but there are only a few insurers that will issue full coverage for a rebuilt car title.
Insurance providers only offer liability coverage to vehicles with a rebuilt title, so it’s unlikely you will find an insurer that will also include comprehensive or collision coverage on the policy. But if you’re willing to do a little research, perhaps you will find something.
Guidelines for rebuilt vehicles vary
If the vehicle is restored, in many states it must be inspected. Upon passing such an inspection, a “rebuilt title” can be issued for the vehicle from the state’s department of motor vehicles (DMV).
A reconstructed vehicle with a rebuilt title can be driven on the highways. The guidelines for getting a rebuilt title vary by state.
For example, the state of Florida requires a vehicle to have a salvage title if the insurance company declared the vehicle a total loss.
In some other states, they “brand” or mark the vehicle’s title when the estimate of damages reaches a certain percentage of the vehicle’s retail value. For example, it is 75% in New York. The vehicle also might have to meet other requirements before it gets this brand.
The rules can be complex for rebuilt and salvage vehicles.
For example, the Georgia Department of Revenue notes that anyone who purchases a salvage or wrecked motor vehicle for the purpose of restoring or rebuilding it must be licensed as a rebuilder.
Before purchasing a rebuilt vehicle, it should be thoroughly checked out by your mechanic. You also should check to see if the car can be insured with your current insurer, since the insurer’s underwriting rules might preclude them from writing policies for cars with salvage or rebuilt titles.
Many auto insurance carriers simply don’t offer policies for rebuilt cars. Or, if a policy is offered, it may be only for liability coverage. Types of car insurance such as collision and comprehensive coverages might not be available, because it’s too difficult to determine a rebuilt car’s true value.
If you purchase a vehicle with a rebuilt title, you’ll have to shop around and compare car insurance rates to find the right car insurance company for your needs. Look for insurers that allow full coverage on cars with branded titles.
Our guide on how to insure a rebuilt title car has more details on how to get coverage and on companies that sell insurance for rebuilt title cars.
— Michelle Megna contributed to this story.
Sources
Kelley Blue Book. “Frequently Asked Questions.” Accessed January 2023.
Carfax. “What is a salvage title car?” Accessed January 2023.
Florida Department of Highway Safety and Motor Vehicles. “Application for salvage title/certificate of destruction.” Accessed January 2023.
Georgia Department of Revenue. “Titles for Rebuilt or Restored Vehicles.” Accessed January 2023.
New York State Department of Motor Vehicles. “Salvage branding of New York State registered vehicles.” Accessed January 2023.
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