What is a rebuilt title vs. a salvage title?
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Vehicles with a rebuilt or salvage title are cars that have been repurchased and repaired after being declared a total loss by the insurance company. This typically occurs after a vehicle is totaled in an accident, but can also be a result of a natural disaster causing extensive damage to a car, like the damages that can be caused by flooding from a hurricane. Once the car is purchased back from the insurance company and repaired, it may then be sold as a rebuilt or salvage title.
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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
That’s why, when shopping for a used vehicle, you might come across one with a rebuilt or salvage title, which will typically come with a lower-than-average sticker price. But while you may be able to get a good deal on a salvage or rebuilt title car, it’s important to remember that you’re getting a car that has been fixed after it was declared a total loss. While these vehicles can be a good fit for the right buyer, it can benefit you to understand all aspects of these vehicles before making a decision to purchase one.
What are the differences between a salvage title and a rebuilt title?
To help you have a better understanding of what each title means, here is a closer look at both:
What is a salvage title?
A salvage title is designated for when the vehicle’s repair costs outweigh its market value and the vehicle is considered totaled. This normally happens when an insurance company writes off the vehicle as unrepairable. Some of the most common reasons why a car might have a salvage title are accidents, weather (especially flood damage) or the car was stolen. Vehicles given a salvage title may not be safe to drive due to the danger posed because of its extensive damage.
What is a rebuilt title?
When a car with a salvage title has been repaired, it can receive a rebuilt title. This notifies the buyer of the previous history of the vehicle. To receive a rebuilt title, the vehicle must pass a series of tests to ensure it is safe to drive in some states. However, in other states, there might not be any requirements to inform prospective buyers of the vehicle’s history.
How does a car get a salvage or rebuilt title?
If a vehicle incurs extensive damage with repairs totaling between 70%-90% of the car’s value, then the insurance company may deem the car as a total loss. Once that determination has been made, a state motor vehicle agency changes the car’s title from clean to either salvage or junk. After being presented with a salvage title, you cannot drive, sell or register the vehicle until it has been repaired.
At this point, the salvage vehicle is typically 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 pass safety requirements before being given a rebuilt title by the state’s motor vehicle agency. By giving the repaired vehicle a rebuilt title, this provides the buyer more information about its history.
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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
How does a rebuilt title affect the value of a car?
A vehicle having a rebuilt title will likely have a lower market value because it underwent significant damage. Compared to similar models with clean titles, a car with a rebuilt title could have 20% to 40% less value, amounting to potentially thousands of dollars.
Should you buy a car with a rebuilt title?
This depends on your situation. On the one hand, it could be a good deal to buy a car with this title. In some states, vehicles must pass rigorous inspections to receive a rebuilt title. And because the vehicle had a salvage title at one point, the resale value could be much less. This means you could save significantly.
That said, there could be some drawbacks. Just because it passed state inspection does not mean the car is guaranteed to be safe for the long haul. Additionally, it could be difficult to get insurance coverage for your vehicle. And circling back to value, while you might get a good deal to buy it, if you plan to sell it at some point, you probably will not get nearly as much as you would with a vehicle with a clean title.
A vehicle with a rebuilt title may even be harder to sell compared to one with a clean title. Buyers could be wary of rebuilt titles because this usually means that the car has been in a bad accident or even totaled in the past. Potential buyers looking to invest their money into a vehicle can be wary of rebuilt titles because of any issues that may emerge from past accidents.
A few things to consider before buying a vehicle with a rebuilt title are:
- How the vehicle was damaged
- Extent of the damage
- Process of vehicle repair and the location of the repair
- Whether a professional or certified mechanic examined the vehicle
- Whether your insurance company will cover a vehicle with a rebuilt title.
Just because a vehicle with a rebuilt title passed state examinations does not guarantee safety in the long run. It is important to do your research and thoroughly examine the vehicle before settling on one. A few things that can help determine whether the vehicle will be worth it or not are by examining the car’s frame and alignment. A vehicle with a lot of external wear may indicate the first sign that it is a lemon. Additionally, a vehicle that is not aligned may cause problems in the long run. Lastly, it is important to get a professional mechanic to check the engine.
Getting insurance with a salvage or rebuilt title
Salvage title insurance may be hard to find since the vehicle, in many cases, isn’t safe to drive. However, rebuilt title insurance is easier to obtain, but certain stipulations will still apply.
Even after the necessary repairs are made, some insurers may only offer liability coverage. Many car insurance companies will not extend full coverage for salvage or rebuilt vehicle because it is challenging to assess all of the pre-existing damage the vehicle has incurred. Collision and comprehensive coverage, which are both optional on standard auto policies, are unlikely to be offered with this type of title.
Since a rebuilt title signifies that the vehicle is no longer in its pristine, undamaged state, its value is much lower. Furthermore, because there may be undisclosed or unseen damage in a rebuilt vehicle, insurance companies will also view this type of title as being more likely to pose a risk on the road.
After you have found an insurance company to insure a car with a rebuilt title, you may be able to take more steps to receive more coverage. To prove that a vehicle with a rebuilt title is insurable, you may be able to provide more information to your insurer. This includes a statement from a professional mechanic indicating that your vehicle is in good working condition, pictures that show its present condition and repair receipts, which is a given when you purchase a vehicle with a rebuilt title.
What are some advantages and disadvantages of having a salvage or rebuilt title?
Purchasing a previously damaged vehicle can be a risky move, but if you know what you’re doing, it could also be a smart move. One advantage of vehicles with a salvage or rebuilt title is that they generally cost much less than those with clean titles. In fact, salvage or rebuilt vehicles generally cost 20%-40% less than the same type of vehicle with a clean title, according to Kelley Blue Book.
On the other hand, purchasing a car with a rebuilt title can lead to more costs in the long-term if the repairs previously made were not up to par. When you purchase a salvage rebuilt vehicle, you are accepting that extensive damage has occurred to the vehicle. In some cases, there may still be undisclosed or unseen damages that could arise at a later date.
Likewise, even if the vehicle has been fully repaired, you may have trouble finding insurance coverage for the car. In many cases, those carriers who insure vehicles with a rebuilt title may charge the same premium as a similar vehicle with a clean title, even if your vehicle is worth much less.
Frequently asked questions
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Each state has its own regulations, with some being more stringent than others. The best approach is to contact your state’s motor vehicles department to learn the process of obtaining a rebuilt title. In general, though, you may be required to have the following in order for the vehicle’s title to be changed to “rebuilt” after repairs:
- A salvage certificate from your vehicle’s insurance company
- An inspection by an authorized third party
- An inspection from certain state or county departments
- A statement of the repairs, signed by an authorized third party
- Proof of ownership
These requirements may vary by state, though, so it’s important to do your research about the state-specific requirements you must meet in order to get a rebuilt title for your vehicle.
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If you’re willing to put in the time to find a worthwhile vehicle with a salvage title, the vehicle you get in return may be worth the effort. Salvage titles are rarely given to “junkers,” so most salvage titled cars are still reasonably drivable after the repairs have been made. And, if you are an experienced mechanic or know one who can do great work inexpensively, then a salvage titled vehicle could be a great buy.
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First, check the vehicle’s history through Carfax or a similar service to determine what caused the salvage title status. In a few states like Ohio, something as innocuous as an abandoned vehicle could earn the salvage title distinction.Next, see if you can determine who did the repair work and the quality of their work. Research them online, noting Google consumer reviews, their Better Business Bureau report and any complaints filed with your state’s office of consumer affairs to see if they are well-rated and reputable. Taking these steps will help make the process smoother if you are interested in purchasing a vehicle with a rebuilt title.
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