Buying a car with a budget opens up a world of opportunity that can get pretty confusing: how do I differentiate used cars, and how are they different from rebuilt titles and salvage titles? How do I know if I’m getting the proper value for both?
Today, I will be talking to you about the perks and risks of buying used cars with previous damage, as well as ways of mitigating the risks and getting car insurance despite the vehicle’s history.
What is a rebuilt title?
Salvage titles and rebuilt titles: what’s the difference?
Salvage titles are put on cars that have been in damaging circumstances, like car accidents, fires, weather conditions, collisions with other cars, floods, and other acts of nature.
The repair job needed by the damaged vehicle is deemed by the insurance company to cost too much and too close to the value of the car itself (this starts around 50%), so instead the company totals it out and pays the owner a certain amount rather than paying to have it fixed.
In most states, totaling it out means declaring it a total loss and issuing it a salvage title. If it passes the state salvage inspection and can operate safely again provided it gets the proper repairs, then it’s legally allowed back on the road and given a rebuilt title.
Should you buy a rebuilt title?
Let’s put this out there: rebuilt titles don’t always have to mean that there was any previous structural damage done to the vehicle. Sometimes, more often than not, the salvage title car may have had no structural damage entirely and has only received repairs that needed factory parts.
In this case, it shouldn’t be as different from buying a car with a clean title, and you can get a pretty good deal for it too!
Before buying a rebuilt title, there are some things you have to make sure of before deciding on one. You don’t want to end up with a rebuilt title from unscrupulous dealers that illegally sell cars that are too damaged to operate safely ever again.
This will need the help of professionals in the field, so if you know any mechanics that can lend you a hand, proceed to the next section of the article to know more about car-buying tips when it comes to rebuilt titles.
If you’re planning to buy a rebuilt title vehicle as your first car, consider watching this video first:
Questions you should ask before buying the vehicle
● Should I buy with cash or a car loan?
Loans are perfect if what you’re buying is clean and brand new. Generally, buying a rebuilt title with a loan may not be a good idea. You may have overlooked some damages that can cause the car to function for only a certain period of time, so you may also end up paying for the loan even if you can’t actually use the car anymore.
Most banks may also not grant you any specialized or personal loans because they flat out refuse to offer auto loans on rebuilt titles.
● Can I get insurance for it?
To be fair, it’s difficult to get a rebuilt car, the insurance you can usually get for a car with a clean title.
Insurance companies are usually hesitant to offer full insurance and have different ways of placing a value on a rebuilt title, and some even flat out refuse to insure the car.
Before you decide to buy a rebuilt title, make sure that calling your car insurance company and ironing out the details is at the top of your list. Large car insurance companies may offer insurance on rebuilt titles because they can handle the added risk.
We’ll talk about the how to’ss of insuring a rebuilt title in a bit.
● Do I plan to sell the car sometime in the future?
Buying a rebuilt title that can last you some time? Depending on your circumstances and the way you’ve planned out your expenses, it may be a good idea.
Buying a rebuilt title from someone who’s already bought and used it before you? It may be a terribly bad idea.
It can be pretty difficult to sell a rebuilt title after some time, and even if you did, it’s unlikely people will buy it for your asking price.
Rebuilt titles may also not qualify for trade-ins, as most dealerships don’t usually accept these kinds of vehicles.
● Have I inspected the car enough?
Head on over to thisvideo to get more ins on what to check before buying rebuilt title vehicles:
Ask these questions:
- Are there any leaks? Is there a funky smell coming from the AC?
- Are the airbags present? Are the dash warning lights functioning?
Acquaint yourself with the essential features that any vehicle should have to ensure your general safety.
If you’re not careful, you might get stuck with a rebuilt title with chronic defects, or, unknowingly, a salvage title from unscrupulous dealers.
Some forms of damage are not repairable, no matter how good the mechanic rebuilding it is. There are telltale signs that a “rebuilt title” may actually just be a rebuilt wreck:
- Paint that chips off
- Misaligned fenders
- Molding that indicates flood damage
- Doors that don’t close properly or have a difficulty of closing
- Hoods and trunks that don’t close correctly
- Improper replacing of airbags, which you can spot if the dashboard air-bag indicator doesn’t light up
- Big dents, crunched pipes
- New metal that doesn’t match the piece (indicates only section repair, not a replacement of the whole piece)
- Damaged safety belts
- Frame damage that you can detect by uneven tread wear
- Use of non-original equipment manufacturer parts, which are sometimes causes of misaligned fenders
- Silt in trunk
- Uneven surface
- Missing car emblem or name
● Am I paying the right value?
The general rule of thumb: if it was the same kind of car but with a clean title, it will generally cost 50% to 60% more than the rebuilt title. Essentially, you’ll be getting a rebuilt title that’s half the cost of one with a clean title.
Perks and Risks of buying a rebuilt title
● Low price
This is not like the low prices you can get for a used car. Rebuilt titles cost even less and work fine despite the cosmetic damage.
This is because adjusters of insurance companies don’t always get it right– being totaled doesn’t always mean that it’s irreparable.
You might find a seller that has put effort into rebuilding the vehicle for sale.
● It’s a great short-term solution.
Because of the unlikelihood of rebuilt cars being up for resale, buying one might not be so great for your long term plans. If, however, you’re looking for something that you can get faster and will cost loads cheaper, buying a rebuilt car is the way to go.
● It usually depends on the situation: in some cases, the rebuilt title may not even have any damages.
Stolen cars that haven’t been recovered within 21 days are declared by the car insurance company as a total loss. Recovered cars that have been totaled are branded as salvage status and, provided the car was working just fine, can immediately pass the state inspection test.
● It’s safer than buying salvage title cars.
With the latter, it’s usually a guessing game that can end terribly. Rebuilt title cars, however, have safety nets, provided the seller is legitimate.
The history and documentation of damage and repairs done on the rebuilt title car is available to the buyer, so you can rule out the bad choices.
● Some forms of damage are manageable.
While fire, flood and electrical damages are ones to steer clear from, as long as the car does not have any significant structural damage that compromises safety or have any possible chronic defect that will end up with you getting it repaired all the time, you might get a pretty good deal on the make and model that you want.
Frugal buying will always have its perks, but it means that you generally have to be smarter and more cautious about it. There are always risks, but there are also many ways that you can mitigate them. For example, you might encounter these problems once you start looking into rebuilt titles for sale:
- There may be undetected frame damage that may jeopardize the car’s safety. Once the frame is damaged, the car can’t be repaired, and even if it can, you can never be sure of how safe it is. There are also no safety nets: no legal recourse exists to protect you if you find out the repairs weren’t done properly after the transaction.
- The car may likely develop mechanical and electrical problems in the future.
- The severity of damage may need more or frequent repairs. You can actually end up wasting more money by having it repaired over and over again.
- Illegal dealers may have had the car pass the state inspection first and then removed the good and functional parts after, and replaced them with old ones.
Still, there are perfectly good, functional rebuilt titles out there that can last you for some time. Just make sure you check these off when deciding to buy one:
- A certified mechanic to give a second opinion and to help you out in inspecting the vehicle and its repair work.
- Full disclosure on the car’s information: the damage, the list of repair work, whether there are any aftermarket warranties, and the value of the vehicle.
Checking for the quality of the repair job means checking out the parts that were used and whether these parts were appropriate for the kind of damage inflicted on the vehicle.
You have to be very careful about shops that use substandard parts, or even worse, patching up a car that should’ve been retired altogether and putting it back on the road.
Of course, making sure you’re not being fooled without having professional knowledge of the field itself can be tricky, so it’s best to get yourself a certified independent mechanic to help you out.
You can also consult with the mechanic by asking for the paperwork that covers the labor and repairs of the vehicle to check if the parts that were used are appropriate. The paperwork should already be a given; a legitimate seller should provide full documentation of the repair work.
The kind and extent of damage done to the vehicle to help improve your odds and rule out the bad choices
There are available companies you can call to check the history of damage on the vehicle, such as Carfax, the National Motor Vehicle Title Information System and Autocheck. You can also check with the Department of Motor Vehicles.
Some rebuilt titles are worth buying depending on the kind of damage they’ve received. For example, you might want to avoid rebuilt titles that were totaled because of weather and flooding.
Water can cause molding and trouble to the car’s electrical components, and seawater especially can corrode the metalwork. Vandalism and hail, however, are causes of damage that may not be so bad.
How to get insurance for a rebuilt title vehicle
Despite the difficulty of buying insurance for rebuilt titles, it’s not impossible. Whether you live in a state that legally requires car insurance or not, having coverage is important.
There are four important things you need to keep in mind in ensuring rebuilt titles:
- Look for car insurance agencies that will be willing to offer coverage on rebuilt titles. Large car insurance companies are more likely to agree, while smaller companies may think that the added cost is risky.
- If a car insurance company does offer rebuilt title insurance, chances are, it’s a limited policy. For some insurers, this will only include liability coverage, which should be enough to cover the costs on damages you may cause on the rebuilt title. Full coverage can be pretty difficult to get.
- In the event that the insurance company agrees to full coverage (this covers any damage that involves a collision, theft, and acts of nature), this will vary depending on the value of the rebuilt title, the quality of its repairs, and the likelihood of it being involved in another accident.
- Some insurers might actually charge more because of the added risk. It usually goes up to 20%. If the amount you’re not saving any money by paying for an insurance deal that exceeds the price you bought the rebuilt title for, you may want to reconsider.
Once you’ve ironed out the details and those concerns with your mechanic and other professionals you might be consulting with, here are the steps on insuring a rebuilt title:
- Shop around and compare quotes for companies that offer rebuilt title insurance. Make sure you compare at least three to four.
- Request a certified statement and inspection report from your mechanic that helped you inspect the vehicle to prove that the vehicle is fully operational.
- Take photos of your car and even a few videos to show the car insurance company. These photos are usually required so the insurers can have something to compare it to when you make a damage claim in the future. The appearance of the car will also help if you’re trying to get full coverage insurance.
- Present an estimate of the original repairs done on the rebuilt title. Just as you require full disclosure of the damage and repair history from the seller, the insurance company will need proof that all damages have been repaired.
To recap: a rebuilt title is a car that has been in a situation that the insurance company considers a total loss and is given a salvage title.
It passed the state inspection and is legally allowed to be sold again, provided it goes through the appropriate repairs. It doesn’t always mean it’s a bad purchase, because the buyer is always privy to the kinds of damage that it went through and can decide for themselves if the car is worth buying.
The bottom line when buying a rebuilt title is always to seek out the advice of professionals and equip yourself with the necessary background checks and information.
Think of your short and long term plans and whether buying a rebuilt title will affect those plans negatively or positively. Remember, it’s not always about the low prices.
If you’ve purchased a rebuilt title car, let me know and start a discussion below!
Like this post? Read more about the how’s of car insurance:
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- 5 steps to get your auto insured
- How to report a personal injury to your car insurance company
Comment below and let me know which areas do you want me to cover in the next article.