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Rebuilt Title Vs. Salvage Title – What’s The Difference?

car accident claim

One of the things you expect to be given once you’ve purchased a car is a title. We all know the title is important, as it contains all the details about the vehicle, including the automobile’s gross weight, model, year of manufacture, and identification number.

But there’s something else you probably didn’t know about these titles.

If you’re purchasing an unused car, the title that comes with it will definitely be a clean title. However, if the vehicle is a used one, you’ll usually receive either a “rebuilt” or “salvage” title.

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Salvage Title

This type of title is only assigned to vehicles that have already been examined and deemed unroadworthy or unrepairable. And seeing as it’s against the law to drive around with such a vehicle, you’ll never find it being sold in any dealership. If you do own one, you’ll only be allowed to sell the parts that are still in usable condition.

You don’t have to be an expert to know which vehicle has been designated a salvage title. All you need to do is to calculate the repair costs, and then compare them to the vehicle’s current market value. If the costs outweigh the value, the vehicle is considered totaled.

No insurance company will want to cater to the repair costs of a totaled car, because they already know it’s not cost-effective. They’ll take a different route, which involves fully compensating the driver, so that he or she can replace the vehicle with a relatively similar model.

More often than not, you’ll find that salvage titles are assigned to cars that have been stolen, those involved in accidents, or the ones considered to be a total loss by their respective insurers. So, it’s the company that ultimately decides whether the vehicle is still in a good condition to be driven or not. We sometimes rely on state laws, but different states have different laws—the only way to be sure is to talk to an insurance company.

car record
Image Credit: Andrey_Popov, Shuttersock

Is It Legal to Purchase a Salvage Title Car?

Salvage titles are not meant to discourage the seller from selling the car. They are there to protect naïve buyers who might be taken advantage of. Several states have laws that dictate that every seller looking to sell any vehicle that comes with a salvage title has to disclose that information.

By the way, there is a system that tracks salvaged cars. It’s called the National Motor Vehicle Title Information System, and it has every detail about the vehicle you’re thinking of buying. If you wish to be given a report, just log into any approved data provider, and request one.

As mentioned before, you cannot drive a car with a salvage title. You must first repair everything that’s malfunctioning, to ensure the vehicle’s not a hazard on the roads. In addition, you’re required by law to document all the repairs, as they’ll be needed when it’s time to replace the salvage title with a rebuilt title.

Buying a salvage titled car is not necessarily a terrible idea. Even though all of them are unroadworthy, they can still be repaired and sold at a price that’s 20%–40% less than what they’d typically charge you for a clear titled car.

What’s more, not every vehicle tagged as salvaged is totally wrecked. You could be lucky to find one that’s just old and costs $1,000 to fix. Or maybe it was damaged from hail, and all you have to do to bring it back to life is fix a couple of issues that are not so serious.

If you think of it as a deathtrap, you could always buy one and use it for parts instead of fixing the whole thing. Most of those vehicles still have functional parts that are hard-to-find and costly at the current market rates.

The point that we’re trying to make is, buying a salvage title car has never been illegal. But before you decide to go for one, think about the costs you’ll likely incur, and the difficulties often experienced while trying to acquire insurance.

car crash accident on the road
Image Credit: Kwangmoozaa, Shutterstock
Pros
  • Salvaged cars are cheap
  • A great source of hard-to-find auto parts
Cons
  • Costly repairs
  • Not easy to be insured

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Rebuilt Title

Should you decide to repair a salvage titled car, its title will be changed to “rebuilt,” once you’re done working on it—a rebuilt title is essentially an upgrade of a salvage title. And, it also provides consumers with important details about the automobile’s previous history. Any vehicle that has been designated the rebuilt title can be sold to anyone, as long as it’s in a drivable condition.

“Drivable” in this context means that even though it’s not in a perfect condition, it won’t risk the life of the person behind the wheels, or that of anyone else on the road.

You’ll come to learn that receiving a rebuilt title is no walk in the park. You have to invest a lot of time and money in repairs, and then pass all the tests provided by the state. Safe to say, there’s no vehicle out there that has transitioned from salvage to rebuilt without being inspected or deemed safe to drive.

Car Oil
Image Credit: Pixabay

What’s the Downside to Purchasing a Rebuilt Car?

First off, you cannot change a rebuilt title into a clean title. Clean titles are only reserved for new cars. For a seller, this is bad news because it means you’ll have no other choice but to sell the car at a discount. But from the buyer’s perspective, it’s a good thing. That mark will be a reminder that they are about to purchase a low-valued car that’s not in the best of condition.

Insuring a rebuilt titled car is just as difficult as insuring the salvaged one. Very few insurers will be open to the idea of insuring such a car, and even then, they’ll never cover collision and comprehensive care.

Finding a bank or lender who’s willing and ready to finance your purchase will be another tall order. They are always wary of its ability to function as a “normal car” and sometimes question the repair history.

Pros
  • The cars are discounted
Cons
  • Can’t be changed to a clean title
  • Financing the purchase is a problem
  • Insurers don’t like insuring rebuilt title cars

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Rebuilt Title vs. Salvage Title

Rebuilt Salvage
Definition Title given to vehicles that were once considered salvage but are now repaired and in working condition. Title allocated to vehicles that are not safe to drive, or those that are unrepairable.
Law In the eyes of the law, these vehicles are in a roadworthy state. These vehicles are not supposed to be on the road or driven anywhere.
Safety Although they’re not in perfect condition, they are safe to drive. The car is not safe to drive.
Sale Sold at a discounted price. Should be sold in parts, or as scrap.
couple at the car dealer showroom
Image Credit: Nejron Photo, Shutterstck

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Frequently Asked Questions

Does the rebuilt title influence a vehicle’s value in the market?

Yes, it does. It will negatively affect the value because it’s a constant reminder that the car underwent significant damage. Although most of us love cheap things, very few people are willing or ready to invest their hard-earned money in commodities that were once damaged. Even if those things are now fully operational.

The value of a rebuilt titled car will always be 20%–40% less than that of a clean titled car. If you’ve ever purchased a vehicle before, you’ll know this could account for thousands of dollars.

Which is a better for me? A rebuilt or salvage title vehicle?

This will depend on a couple of things. For example, what are you planning to use the vehicle for? Are you thinking of using it for spare parts? Or to drive it around?

If the goal is to disassemble and use its parts for service parts, we say go for the salvage title car. But if you’re looking for something that could help you with your commute, the rebuilt title car is the perfect fit.

old man handing over car keys to a young man
Image Credit: Freepik

What are the things to pay attention to when buying a rebuilt title vehicle?

Try to find out what caused the vehicle to get assigned the salvage title. Of course, finding this information shouldn’t be difficult, seeing as there are data portals that already have the history you’re looking for. If you’re lucky, you could find a vehicle that was given the salvage title just for being abandoned.

If it was involved in an accident, look for the information on the mechanic who worked on it. This is where the Better Business Bureau reports and the online reviews come in. Needless to say, you shouldn’t buy anything that was repaired by a mechanic who has negative reviews online.

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Final Word

There is a big difference between salvage and rebuilt titles. Some people love using them interchangeably, despite the fact that there are some significant legal differences. Hopefully, our article has given you all the information you need to tell the difference when buying or selling a car.


Featured Image credit: Pair Srinrat, Shutterstock

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