If you're shopping for a used car, you may come across some dramatically marked-down listings for vehicles with what's called a "rebuilt title." While their low sticker prices can be tempting, it's important to know what a rebuilt title means.
- Cars with rebuilt titles have typically been declared total losses by an insurance company and then repaired for resale.
- A car with a rebuilt title should sell for considerably less than a similar model with a "clean" title.
- Having a rebuilt title can also make a car more difficult to insure.
What Is a Rebuilt Title?
Most used vehicles come with a "clean title" that certifies the new owner is getting a vehicle that's in good working order. However, if a used vehicle had ever been involved in a major accident, gone through a manufacturer buyback thanks to a successful lemon law claim, or had its odometer rolled back, it could come with a rebuilt title.
A rebuilt title generally means that at some point the car was so badly damaged it was declared an actual total loss—or "totaled"—by an auto insurance company. If that same vehicle subsequently goes on sale with a rebuilt title, someone has gone to the effort of repairing or rebuilding it to operate properly. Depending on local laws, the repaired vehicle would likely have to undergo an inspection before it can be driven on public roads.
Rebuilt Title vs. Salvage Title
It takes a lot for a totaled car to become operable enough to receive a rebuilt title. When a car is declared a total loss by an insurance company, it gets a salvage title. These vehicles are deemed unsafe to operate on public roads and the salvage title helps warn potential buyers that the vehicle is severely damaged.
Salvage vehicles are typically sold "as is," with the intention that whoever purchases one will likely either try to rebuilt it or use it for parts to repair other vehicles. If it's the former, the new owner can apply for a rebuilt title from their state department of motor vehicles after repairs are completed.
Some unscrupulous sellers may attempt to hide the fact that a car had been totaled by transporting it to another state, repairing it, and applying for a new, clean title—a process known as "title washing." To help combat that deception, the National Insurance Crime Bureau (NICB) offers a free online service called VINCheck that lets prospective purchasers check the car's vehicle identification number (VIN) to see whether an insurance company has previously reported it as a total loss.
Pros and Cons of a Rebuilt Title
Despite their checkered past, it isn't always a bad idea to purchase a vehicle with a rebuilt title. Here are some pros and cons, staring with the pros:
Pros of Buying a Vehicle With a Rebuilt Title
- The cost is markedly lower. A car with a rebuilt title should sell for considerably less than a similar model with a clean title.
- The damage may not be as bad as you thought. There are many reasons for a car to be declared a total loss. If the rebuilt car is structurally sound and simply needed some expensive new parts that the insurance company didn't want to pay for, it may be fine. But if it suffered more severe damage, resulting in, for example, a warped or cracked frame, it could be a gamble that isn't worth taking. Be sure to ask why the car had to be rebuilt and what was done to fix the damage, and also check the VIN at the NICB site. If you aren't an automotive expert yourself, consider paying a trustworthy mechanic look it over for you.
Cons of Buying a Vehicle With a Rebuilt Title
- Past damages can rear their ugly head later. Even if you tried to inspect the car thoroughly before finalizing the transaction, cars are complex machines and things can go wrong. Mechanical issues that appeared to be fixed could cost you hundreds or thousands of dollars in repairs. One type of damage to be especially wary of is flooding, which may not be immediately obvious but can cause major problems as metal corrodes. Consumer Reports has a checklist on how to spot a flood-damaged car.
- It could be harder to get insurance. Your car might be in tip-top shape, but a rebuilt title can be radioactive to some insurance companies. In some cases, an insurer may refuse to sell you collision or comprehensive insurance, which cover damage to your own car, but will agree to sell you liability insurance, which covers damage you cause to other people or their property. Liability coverage is mandatory for drivers in virtually every state, but collision and comprehensive are optional.
- It may be tough to sell. When you no longer need the vehicle or have decided to trade up, your car's rebuilt title could scare off potential buyers.
Should I Buy a Car With a Rebuilt Title?
Buying a car with a rebuilt title is a gamble. If you're willing to take the risk—and all goes well—it could turn out to be a rare bargain. Otherwise, it could end up costing you more than simply buying a car with a clean title in the first place.