When you’re shopping for vehicles, it can get very confusing very fast, especially if you don’t know what you want. Makes, models, new, used: where do you start? First you need to decide on your budget. If you have limited funds, you may be tempted to consider cars that aren’t in the best shape. You may find yourself asking the question, “Should I buy a car with a rebuilt salvage title?
What is it?
First, it is important to clarify what exactly what salvage and rebuilt mean. If a car is involved in an accident, and the damage is between 75 and 90 percent of its original value, then it is labeled “salvage” by the insurer. The car is declared a total loss, the owner is paid a certain amount under the terms of their insurance coverage, and the damaged car is usually sold at auction or to scrap yard. The exact percentage considered to be a total loss varies from state to state, but in general, the damage has to be great in order to get a “salvage” designation. The clean title the car once had is now replaced with a salvage title. Cars with salvage titles can still be sold, but that information needs to be disclosed to potential buyers because the auto may not be safe to drive in its current state.
After receiving a salvage title, the owner may choose to have the car repaired. If the vehicle has been restored back to a working condition, it may be awarded a rebuilt title, sometimes called a rebuilt salvage title. This lets potential buyers know that the car has been rebuilt and has been approved by the state’s department of motor vehicles, which issues the new title. The department has rigorous standards for what it considers to be in a rebuilt condition and will require that the vehicle go through inspection before gaining the upgraded title designation.
Pros and Cons
There are many issues to consider if you are thinking about purchasing a car with a rebuilt title. First, discuss the damage and subsequent repairs with the owner. Even if the car has been rebuilt to a satisfactory condition, it has still been involved in a major accident. The basic structure of the car may have been weakened in the process. However, depending upon the repair work, the car may also have been rebuilt to a like-new condition. The actual state of the car may be unclear, putting you as the buyer at risk. If possible, have a mechanic examine the vehicle for you before a possible purchase.
Often what attracts buyers to rebuilt title cars is that they are significantly less expensive. While the initial costs may be low, buyers should be aware of potentially higher long-term costs. For example, the repairs done to the vehicle after it was given a salvage title might not have been enough to keep it in a working condition for an extended period of time. This may leave you, as the new owner, having to pay for additional maintenance costs further down the road. Additionally, if you want to sell the car, you may have difficulties, as most dealerships will not buy it, and many consumers would rather purchase a car with a clean title instead. Once a car has been branded with a rebuilt title, it cannot legally be upgraded to a clean title. The value of a rebuilt title car is often simply too low to attract a potential buyer.
In addition to higher long-term costs and resale difficulties, you may have trouble purchasing the rebuilt title car, should you need a bank loan. Often, banks are hesitant or will simply refuse to provide financing for rebuilt title vehicles. There’s too much risk involved.
Still want a rebuilt car?
If you are still considering a car with a rebuilt title, you need to make sure you have as much information as possible concerning the history of the vehicle. Ask the owner for receipts documenting the repairs. Verify that the car now has a rebuilt title rather than a salvage title. You may even want to call your state’s department of motor vehicles to ask them about the specific requirements they have for upgrading a car to “rebuilt” status. In many cases, the inspector is only looking for repairs to obvious damage like the tires, windows, headlights, and exhaust. Their job is not to test how well the newly-repaired car handles on the road.
Once you have confirmed that the necessary repairs have been completed and that the car has a rebuilt title, speak with your independent insurance agent. He or she will also want to review the documentation you obtained from the previous owner regarding the car’s condition and title status. There may be certain insurance restrictions in your state that limit the type of coverage you are permitted to purchase. For example, you may only be allowed to get liability insurance, but not comprehensive or collision coverage. This means you will have to pay for any damages to your car after a collision. If you are permitted to purchase fuller coverage, it may be at a much higher price. Speaking with an independent agent will help to clarify any questions you may have regarding a rebuilt salvage car.
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