When it comes to buying a used vehicle, you’ve likely come across examples with rebuilt or salvage titles.
As you can imagine, there are cases where such vehicles can be a good idea for some buyers, and you’re probably thinking cars with those titles might be suitable for you.
The thing is, you should make sure you fully understand all aspects of buying vehicles with rebuilt titles or salvage titles, including the impact they have on your vehicle insurance. With that in mind, the following guide will help you gain a deeper understanding of the subject:
Salvage Vs. Rebuilt Titles: What’s The Difference?
In a nutshell, cars with salvage titles have been damaged previously and declared a total loss by insurance companies.
They are official indications that the cost of repairs was uneconomical to those insurers, and so money got paid out by those insurance companies to their customers.
In those situations, the insurers usually keep those damaged vehicles and then resell them to auto repair companies to recoup some of their costs. Some of the most common reasons for declaring a vehicle a total loss include:
- Collision damage from accidents;
- Fire damage, either caused by the car itself, its occupants, or a third party;
- Flood damage;
- Theft and subsequent recovery of the vehicle.
While it’s possible that some cars with a salvage title cannot get rebuilt, perhaps due to excessive structural damage, most salvage cars are repairable. When that happens, those vehicle owners can receive a “rebuilt” title in specific circumstances.
For example, if a car gets rebuilt and passes a series of state-mandated safety tests, the owner of that vehicle can then receive a rebuilt title for it.
Cars that have a rebuilt title have been repaired to a high enough standard to meet any applicable state DMV safety tests and laws and are therefore considered in a roadworthy condition.
In some cases, cars rebuilt from a salvage status might have only needed minor repairs (such as a replacement fender or door, for instance).
What Causes Cars To Lose Clean Titles?
Most cars on the used car market have a clean title. That means they have never been declared a total loss by an insurance company.
When a car receives significant damage, such as in a collision with another vehicle, or perhaps if it got stolen and was damaged due to the thief’s reckless driving, the insurance company will assess the damage and determine how much it will cost to repair the car.
If the cost of the repairs is between 75% to 90% of the vehicle’s value, they will most likely deem it uneconomical to repair and subsequently declare the car a total loss.
At that point, after the insurance claim gets paid out and the car belongs to the insurance company, the state’s DMV will convert the vehicle’s title from a “clean” status to “salvage.”
As mentioned earlier, insurers will then sell salvage vehicles to other businesses like auto repair shops. Should those cars get repaired to a roadworthy standard, the shop or whoever now owns the car can apply for the title to change from salvage to “rebuilt” status.
How Do Non-Clean Titles Affect Vehicle Values?
As you might expect, the value of a car with a salvage title or rebuilt title will have a lower market value than those of vehicles with clean titles.
The reason why is simple: it’s because the car will have had significant enough damage to have been declared a total loss by an insurance company.
According to Kelley Blue Book, a car with a salvage or rebuilt title can typically be around 20% to 40% lower than the market value of a vehicle with a clean title. That could mean a value loss of several thousand dollars in some cases.
How To Verify If A Car Has A Non-Clean Title
Whether or not you suspect a car has a salvage or rebuilt title, you should always do a title check on any vehicle you want to buy. You can do so by getting a vehicle history check from Carfax, Autocheck, or NICB.
Keep in mind that such checks don’t always work. For example, the NICB (National Insurance Crime Bureau) only checks insurance companies that are NICB members.
Similarly, Carfax and Autocheck can’t check the details from all insurance companies. However, it’s still worth doing the checks for added peace of mind.
5 Reasons To Buy Cars With Non-Clean Titles
You might be wondering why you should consider buying a car with a salvage title or a rebuilt title. After all, they got damaged in an accident at some point, and their value will always be lower than the average market value.
The truth is, there are many reasons why it can make sense to buy a car with a salvage title or a rebuilt title. One of the main draws to such vehicles is saving a significant sum compared to purchasing a clean title car.
If you’re unsure whether purchasing a car with a salvage or rebuilt title is for you, consider the following reasons:
1. All Vehicles Must Pass A State Inspection
The first thing you should remember about cars with a rebuilt title is that they will have passed stringent safety inspections from the state’s DMV.
When it comes to converting a salvage title to a rebuilt one, the vehicle in question must have undergone repairs carried out to a high standard.
DMV inspections will always detect if repairs weren’t completed correctly, and vehicle owners will subsequently get refused a rebuilt title until the work is carried out correctly.
Buying a car with a rebuilt title could potentially save you thousands of dollars – money that you could use elsewhere, such as putting towards future maintenance costs.
2. You Can Ask For Proof Of All Repairs
As you can appreciate, you want to have peace of mind knowing that all repairs got carried out correctly and by competent auto professionals. After all: the last thing you want to do is buy a car that is likely to have severe issues after a short period!
That’s why, when you go to view cars with a rebuilt title, you can ask to see all documentation relevant to the car’s repair when it got converted from salvage title status.
Reputable sellers will happily provide you with evidence, such as invoices or receipts for all parts and work carried out.
3. You Can Check The Vehicle’s History Through The DMV
What happens if you have your heart set on a particular car with a rebuilt title, but the owner cannot provide you with the documentation to confirm that competent auto professionals did all the repairs?
You might think that your only option is to walk away from the sale and look for another car to buy. However, you might still want to buy the vehicle you initially wanted if you check the car’s history through the DMV.
Doing so will help you view all critical information about the car, such as why the vehicle got a salvage title in the first place and when it got converted into rebuilt title status.
4. Some Rebuilt Vehicles May Have Only Sustained Light Damage
It’s easy to assume that all cars with a salvage title ended up with significant damage. You might not know that it’s often the case where insurance companies will declare cars a total loss if only light damage occurred, but the vehicle’s value was very low.
For example, a car may have been declared a total loss due to $400 worth of body damage to the fenders, hood, bumper, and headlights. However, structural damage may not have been caused to the car’s chassis.
If the vehicle’s value was only $600, for instance, and you can source the parts for say $150 and competently carry out the repairs, you could end up with a cheap car to use as your daily driver or one that you could sell on for a profit.
5. Vehicles With Salvage Titles Can Be Good Donors
Do you have a car that is perhaps undergoing a partial restoration? Maybe you purchased a vehicle cheaply because it needs several mechanical or cosmetic repairs? It often makes sense to buy a “donor car” to use for spare parts in those cases.
Buying a roadworthy donor car can sometimes be an expensive endeavor, but purchasing one with a salvage title will make more sense – especially if you don’t need any of the damaged parts from it.
Such a purchase can mean you have a raft of spare parts at your disposal to use at any time.
5 Questions To Ask About Salvage And Rebuilt Cars
By now, you’ve likely decided that a salvage or rebuilt title car is for you. Moreover, you’re happy that conducting the proper checks to ensure the vehicle you buy is as advertised will mean you end up with the right car for your needs.
Before you head out to buy a car with a salvage title or rebuilt title, there are some questions you need to ask – and feel satisfied with the answers – before you make any purchases.
With that in mind, take a look at the following common questions to ask or qualify whenever you find a car with a salvage or rebuilt title that interests you:
1. Does The Vehicle Have Any Documented History?
The first question you need to ask is about the vehicle’s history. Does it come with any? Also, if it’s a rebuilt title car, is there evidence available of the repair work, such as receipts and invoices for all work carried out and parts used?
If there is no documentation available, you might be able to get some information from your state’s DMV – they can at least tell you why the car originally had a salvage title and when it got converted to rebuilt status.
2. How Was The Vehicle Damaged?
The next thing you need to establish is how and where the vehicle got damaged. You need to determine this information whether you’re buying a salvage title or rebuilt title car.
You might be lucky and find that the car which interests you didn’t actually sustain any damage; instead, it was simply abandoned by its previous owner and subsequently earned the salvage title distinction.
Knowing what damage (if any) the car in question sustained will help you to determine whether it’s a vehicle you still want to buy.
3. How Extensive Was The Damage?
Should your checks reveal the car you want has a salvage or rebuilt title because it indeed sustained some physical damage, you must ask how severe the damage was to the vehicle.
For example, suppose the car’s previous owner had a front-end collision. In that case, you must satisfy yourself that the chassis is still straight and true and that the accident hasn’t caused problems like incorrect suspension geometry or incorrect steering angles.
In many cases, cars with a salvage title or rebuilt title might have had mild cosmetic damage, such as paint damage.
4. How Was The Vehicle Repaired?
You already know that a car with a rebuilt title will have passed a series of rigorous safety checks by your state’s DMV. The thing is, you want to satisfy yourself that the work carried out was done by a professional.
With that in mind, documentation checks should reveal whether that’s the case or not.
A vehicle that was professionally repaired to a high standard should come with written evidence that the work got carried out by an auto shop rather than some person in his backyard.
5. What’s The Seller’s Reputation?
It makes sense to buy a car on a rebuilt title from a reputable dealership. That way, you have more legal recourse if things aren’t what they seem with the vehicle and you want to address any issues.
With that in mind, you should always determine the seller’s reputation. Are they a genuine car dealer or someone likely to sell you a lemon?
One thing you can do is research their reputation online; look for things like online reviews and other feedback by doing a simple Google search on their name.
How To Insure Salvage & Rebuilt Title Cars
Lastly, insurance is one final point to keep in mind when considering salvage title and rebuilt title cars. Can your current insurance company provide you with the cover you need on such a vehicle?
If the answer is no, it’s a good idea to entrust the services of an insurance company that specializes in providing policies for vehicles that don’t have “clean” titles. That’s because some insurance companies might only offer liability coverage.