Understanding Rebuilt Titles: A Guide for Used Car Buyers
If you’re in the market for a used car, you’ve likely encountered listings that offer tempting discounts on vehicles with a “rebuilt” title. While the lower price tag can be alluring, it’s crucial to fully understand what a rebuilt title signifies before making a decision.
What Does a Rebuilt Title Mean?
Most used cars come with a “clean” title, which confirms the vehicle is in good working order. However, if a car has been involved in a significant accident, was subject to a manufacturer buyback following a lemon-law claim, or had its odometer rolled back, it could be issued with a rebuilt title. A rebuilt title typically means the car sustained such severe damage that it was declared a total loss—or “totaled”—by an insurance company. If that same vehicle is subsequently offered for sale with a rebuilt title, someone has repaired or rebuilt it.
Depending on state regulations, a repaired vehicle often requires a thorough inspection before it can legally be driven on public roads.
Rebuilt Title vs. Salvage Title
A car usually must have undergone substantial damage before it’s deemed worthy of a rebuilt title. When an insurance company determines a vehicle is a total loss, it gets a salvage title. These vehicles are considered unsafe for road use, and the salvage title informs potential buyers of severe damage. Salvage vehicles are usually sold “as is,” with the expectation that the buyer will either rebuild the car or use it for parts.
If the car is rebuilt, the new owner can apply for a rebuilt title from their state’s Department of Motor Vehicles once the repairs are complete. Some unscrupulous sellers engage in a practice called “title washing,” where they try to hide the fact that a car was totaled by moving it to another state, repairing it, and obtaining a clean title. To combat this, the National Insurance Crime Bureau (NICB) provides a free online service called VINCheck that allows prospective buyers to check the vehicle identification number (VIN) to see if an insurance company previously reported the vehicle as a total loss.
The Pros and Cons of Buying a Car with a Rebuilt Title
Despite their history, purchasing a car with a rebuilt title isn’t always a bad idea. Here’s a breakdown of the pros and cons:
Pros of Buying a Rebuilt Title Vehicle:
- Significant Cost Savings: Cars with rebuilt titles generally sell for much less than comparable models with clean titles.
- The Damage May Not Be as Bad as You Think: A car can be declared a total loss for several reasons. If the rebuilt car is structurally sound and only needed expensive new parts that the insurance company didn’t want to cover, it might be a good deal. However, if it suffered more serious damage, such as a warped or cracked frame, it could be risky.
- It’s essential to ask about the reasons for the rebuild and the repairs performed. You should also check the VIN at the NICB site. If you are not an automotive expert, consider having a trusted mechanic inspect the car for you.
Cons of Buying a Rebuilt Title Vehicle:
- Potential for Future Problems: Even if you inspect the car meticulously before buying it, cars are complex machines. Mechanical issues could appear later. You might face unexpected repair costs.
- Be especially cautious about flood damage, which may not be immediately evident but can cause major corrosion.
- Insurance Difficulties: A rebuilt title can be problematic when it comes to insurance. Some insurers may refuse to provide collision or comprehensive coverage, which protect your own car, but will provide liability coverage, which covers damage you cause to other people or property.
- Liability coverage is typically mandatory in every state, but collision and comprehensive are optional.
- Resale Challenges: When you decide to sell your car, its rebuilt title could deter potential buyers.
Should You Buy a Car with a Rebuilt Title?
Buying a car with a rebuilt title is a gamble. If you accept the risk—and everything goes well—it could turn out to be a bargain. Otherwise, it could end up costing you more than buying a car with a clean title in the first place. Carefully weigh the pros and cons and consider the potential risks before making a decision.
