Every used car buyer’s worst nightmare is buying a car with hidden damage. To avoid this, it’s important to check the car’s title before making a purchase. Most cars have a clean title, but some have a salvage or rebuilt title, indicating a troubled past. Here’s what you should know about these titles:
What is a Salvage Title?
A salvage title is issued by the state when a car has been declared a total loss by an insurance company. This usually happens when the repair costs exceed 75% of the car’s market value before the incident. A car with a salvage title cannot be driven legally on the street and will require significant repairs to pass the state’s safety inspection. These cars are sold at a fraction of the price of well-maintained cars with a clean title.
What is a Rebuilt Title?
A rebuilt title, also known as a “rebuilt salvage” title, is obtained when a car with a salvage title has been restored to a safe driving condition. The owner must apply for a rebuilt title through the state by filling out paperwork, passing a state safety inspection, and paying the necessary fees. Unlike a car with a salvage title, a car with a rebuilt title can be driven legally on public streets, although it may not provide the same assurance as a clean title.
How Does a Car Get a Salvage or Rebuilt Title?
The insurance company is responsible for changing a clean title to a salvage title when a car has experienced substantial damage. Once a vehicle has a salvage title, it needs considerable repairs before it can be driven legally. After the repairs are completed, the owner can apply for a rebuilt title through the motor vehicle department. The car will then undergo a safety inspection by the state police or a state-certified inspector. Note that only the state that issued the salvage title can change its status.
How Does a Rebuilt Title Affect the Value of a Car?
Cars with a rebuilt title generally sell for substantially less than those with a clean title. This is because buyers may have concerns about the quality of the repairs and parts used. To determine the value of a specific rebuilt car, it’s recommended to have it inspected by a reputable, independent mechanic.
Can You Get Insurance with a Rebuilt Title?
Some major car insurers offer coverage for vehicles with a rebuilt title, although most only provide liability coverage. Comprehensive coverage may be available with extra requirements, such as obtaining a letter from a certified mechanic affirming the car’s safety. Insurance for rebuilt vehicles often costs more than for cars with a clean title.
Should You Buy a Car with a Rebuilt Title?
Rebuilt cars are priced lower than other vehicles, making them more affordable. However, there are risks involved. The “salvage” designation can void the manufacturer’s warranty, and it may be more difficult to get insurance coverage or a loan. To make an informed decision, it’s important to have the car inspected by a trusted mechanic and consider your financial situation.
The Difference Between Salvage and Rebuilt Titles: Legal Driving Status
A car with a salvage title is not legal to drive until it has been rebuilt and issued a rebuilt title. If you’re considering buying a rebuilt car, be aware of the risks and do thorough research before making a decision.
Frequently Asked Questions (FAQs)
What’s required to have my car earn a rebuilt title?
The requirements for changing a salvage title to a rebuilt title vary by state. Typically, you’ll need to fill out an application and have the vehicle pass a state inspection, which can cost around $100 or more.
Is a salvage-titled vehicle right for me?
Salvage-titled vehicles can be a good deal, selling for 20% to 40% less than comparable models with a clean title. However, they may require more maintenance and have limitations on insurance coverage and loans.
What should I look for when buying a vehicle with a rebuilt title?
When buying a car with a rebuilt title, have a trusted mechanic perform an inspection. Consider the cause of the damage and look for signs of flood damage, such as a musty smell or rust, if relevant.
Remember, when it comes to buying a car with a salvaged or rebuilt title, thorough evaluation and careful consideration are key. Visit Personal Finances Blog for more financial insights and tips.