Are you in the market for a new or used vehicle? If so, then you have likely come across the term “rebuilt title” at some point during your search.
When you have a car with a rebuilt title, it differs from other vehicles because of the damage it suffered at some point during its life. It was in an inoperable state, classified as being no longer worth a repair. Insurance companies place most makes and models into this state once they are 80% damaged. Some providers place the threshold as low as 50%.
If a vehicle receives classification as being totaled, then a salvage title gets issued for the car. Should someone decide to repair it after this documentation process is complete, then a rebuilt title becomes available.
As with anything in the vehicle-buying process, there are several pros and cons of buying a car with a rebuilt title that must be taken into consideration.
List of the Pros of Buying a Car with a Rebuilt Title
1. The car typically needs to pass a state inspection.
People are sometimes leery of the idea of purchasing a car with a rebuilt title, but there are specific laws in place to prevent most problems. Vehicles must typically pass a state inspection before they qualify for this status. If that means you’ve got something where the engine runs and the wheels are safe, then you could save thousands of dollars on your next purchase. Some popular makes and models might not be as cheap, but the average person can usually save up to 50% on the cost, depending on the amount of damage and the quality of the repair.
2. You can always ask for documentation about the vehicle’s status.
When a car goes through an extensive repair process, there should be documented evidence of the labor and parts needed to get it running again. If the individual who sells the vehicle refuses to give you any paperwork outlining the restoration work they did, then you have the option to walk away from that transaction. Anyone who sells a car with a rebuilt title won’t mind providing this service if they are a reputable organization.
You have the right to ask for receipts from the repairs. This ensures the work on the vehicle took place at a reputable or licensed facility instead of someone’s garage.
3. You can check on the car’s history through the DMV.
If you want a car with a rebuilt title and the current owner isn’t providing you with the documentation you want, then checking the vehicle’s history is another way to get critical information. You can contact the Department of Motor Vehicles (DMV) in your area or use a third-party service like AutoCheck to get the data you want.
It is essential to know how the car entered a salvaged state in the first place. Then you can review the extent of the repairs. This process allows you to understand what the future maintenance needs of your vehicle will be.
4. Some forms of damage are more manageable when a car gets totaled.
If you have a tight budget, then a rebuilt vehicle might be worth purchasing if it reached a salvage title status because it was stolen and vandalized without extensive damage. Any car that has no significant structural damage after a collision might be worth pursuing. Some insurance companies will total a vehicle as a way to reach a fast settlement or to avoid paying a large claim, which means you could get a pretty good deal on your preferred make and model.
You will want to avoid purchasing a vehicle with a rebuilt title if the car has a history of fire, flood, or electrical damage. These issues are exceptionally difficult to repair, which means the risk of ongoing problems will be much higher in that situation.
5. Salvage vehicles can be a good source for parts.
If you enjoy working on vehicles, then a car with a rebuilt title could be a great investment. You’ll get the chance to rebuild your preferred make and model to your standards. This advantage also means that you can have an excellent source for parts if you have something else that you’re working to fix up. The pool of potential prospects is a little higher if your approach uses this advantage, especially if you know the seller or have enough mechanical knowledge to address any issues.
List of the Cons of Buying a Car with a Rebuilt Title
1. You are going to need a second opinion on the vehicle.
Even though a vehicle typically needs to pass an inspection to become a car with a rebuilt title, that doesn’t mean you’re automatically in the clear. It is still a good idea to get a second opinion on the make and model you prefer – as you would with any other used vehicle that someone might purchase.
It is easy to look at the exterior of a car with a rebuilt title to judge the engine and interior in the same light. The bottom line is that an inspection should always take place because an inexperienced shop might miss something.
2. Someone could remove the new parts after getting a title.
You should approach the idea of a car with a rebuilt title with a little cynicism. All vehicles that come in this state were extremely damaged and usually inoperable. It is possible for someone to put in the work to gain a passing inspection grade and then remove all of the new parts after receiving the rebuilt title. That’s another reason why your mechanic should look carefully at each component before you decide to sign anything or write a check.
3. It may not be easy to sell the vehicle in the future.
If you decide to purchase a car with a rebuilt title, then you must maintain the vehicle carefully. Most owners find that the ownership of their make and model is more problematic than if they’d purchased new or through the standardized used process. That means it can be a challenge to sell when you’re ready to move on from this transaction. There’s an excellent chance that you won’t be making much of a profit from this activity.
You might even discover that donating the vehicle to a charity could be the only way for you to get rid of it when moving on.
4. Your insurance might not cover the vehicle.
Some insurance providers will not insure a car with a rebuilt title. You must review the terms and conditions of your policy, so it helps to speak with your agent about what might be possible. The agencies that do provide protection will require full coverage if you purchase a vehicle in this state.
The reason for this disadvantage is the difficulties in determining the actual value of a car with a rebuilt title. It is easy to miss damage that happened when the vehicle became inoperable in the first place. Almost every state in the U.S. requires liability insurance, so the monthly cost of a policy might offset the financial benefits of moving in this direction.
5. The vehicle might not qualify for a trade-in later.
The resale process for a car with a rebuilt title becomes even more complex since most dealerships will not accept this vehicle as a trade-in with a new transaction. You will need to speak with the facility in advance if this option is what you want to pursue because it could stop the sales process. Even if you have a certified mechanic give your make and model a clean bill of health, it may not be enough to convince someone to take it. That’s why you should consider your long-term goals with this transaction type before settling on a cheaper vehicle that meets your short-term expectations.
6. A salvage title lasts forever, which means a rebuilt one does too.
Once a vehicle gets totaled, there is nothing that can bring it back from that classification. It will always have a rebuilt status, no matter how well it runs after going through the repair process. That means the car is always going to have a lower resale value compared to one that never received that designation. Although this disadvantage isn’t as profound for popular makes and models, it is something that you can never get away from when you pursue this option for your next vehicle.
7. The restoration process is only as good as the mechanic doing the work.
There can be significant safety issues to consider when purchasing a car with a rebuilt title. The family of Bobby Ellsworth found this disadvantage out the hard way after the teen lost his life in an accident because the vehicle didn’t have airbags. The mechanic who had done the restoration work had faked the installation process. Reports of rebuilders using money-saving tactics that cut safety corners are rampant online, so make sure that your mechanic reviews all safety equipment. That includes your seatbelts.
8. Purchasing a car with a rebuilt title is an as-is transaction.
It is not unusual for rebuilders to claim that the damage to a vehicle was minor or cosmetic. Many reputable mechanics tell the truth, but a few are tarnishing the industry by taking an unethical approach. The problem from a buyer’s perspective is that there isn’t much you can do if a car with a rebuilt title turns out to be a lemon.
Even if you receive documentation about repairs taking place, the salvage title itself implies that you have an as-is sale on your hands. That means there are no guarantees or warranties on the condition of the vehicle. If the seller discloses the title and you make the purchase anyway, then there might be no legal recourse to follow.
9. Financing may not be a possibility with a rebuilt title.
Most financial institutions will not provide you with a lending package if you decide to pursue a car with a rebuilt title. There is no way to accurately value the make and model using pricing guides, so understanding what is a reasonable or fair price is almost impossible. Banks and credit unions look at this driving option as a risk, so it is rare to find options for financing. Even if you do receive an offer, the interest rate on the eventual loan is going to be much higher than what it would be for a vehicle without this status.
10. Some forms of damage are not repairable.
Some vehicles become a complete structural loss, which is sometimes a different classification than being “totaled.” If the car has a damaged or bent frame as a result of an accident, then it may not be restorable. Frame damage seriously hurts the structure’s ability to protect anyone in the vehicle from a future incident. If any part of the integrated unibody structure is not stable, then you should stay away from this option unless your goal is to use it as a donor car for parts.
When weighing the pros and cons of a car with a rebuilt title, the primary question you must ask yourself is this: will taking this approach cost me money, or will it help me to save some cash?
The only way to answer that question is to complete a thorough inspection of the vehicle independently. Bring a mechanic you trust to look at every element of the car. Then you’ll have a better idea if there is value in this transaction.
If you see signs on a car that show smashed fuel lines, large dents, or an airbag light that doesn’t work correctly, then the restoration process was not a positive one. You should also avoid cars that have an uneven tire tread or doors, a hood, or a trunk that doesn’t close correctly.
Buying a car with a rebuilt title can be a fantastic experience. It can also be a nightmare. There is no middle ground, which means it is up to you to protect your investment.
Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.