Rebuilt Title: What Is It and Should I Buy a Car With One?

A rebuilt title reflects that a vehicle has been rehabilitated after being issued a salvage title, which would have resulted from extensive collision damage, fire, flood or even a manufacturer buyback following a successful lemon-law claim. Some states give certain circumstances their own titles, resulting in state-specific designations like flood or lemon titles, but not all states issue rebuilt titles, which is one of many differences that create problems for used-car shoppers. Such inconsistencies make it simpler for salvage and other undesirable titles to be washed (that is, altered through unscrupulous means) altogether, hiding a vehicle’s rocky history from potential buyers. But in the case of rebuilt titles, varying standards mean there’s no guarantee a car bearing such a brand will be safe or reliable.

That being said, a car with a rebuilt title has one thing going for it: At least you have a clue what you’re getting, unlike former salvage cars that have reemerged on the market with washed titles. Ironically, as we’ve reported in the past, as many as 1 in every 44.6 used cars in some states have been title-washed, making a car with a rebuilt title look like the picture of transparency. So should you buy one?

Ask Your Insurance Agent

Some insurance companies won’t cover rebuilt cars fully, if at all, though it might depend on the vehicle in question. If no insurer will touch the vehicle, you shouldn’t either. In most states, uninsured cars can’t be registered and driven legally anyway.

Proceed With Extreme Caution

If you choose to proceed, you have as much work to do as the average used-car shopper, and arguably more.

Different types of damage can result in a salvage title, and that includes cosmetic damage. When a car is totaled, it means an insurance company concluded that the car wasn’t worth the cost to repair. But that doesn’t always mean it was irreparable, and insurance adjusters don’t always get it right. A sharp-eyed rehabber might recognize an opportunity given market conditions or even his or her own workload (labor is a major variable in any repair job) and put the effort into rebuilding it for resale.

Though the scenario above exists, never forget that there’s no guarantee the repairs were done properly, and no legal recourse if they weren’t, even in the best of circumstances. And plenty of opportunity exists for the opposite — fraud and deception — even with a vehicle that proudly wears the rebuilt title as if it has nothing to hide. Because insurers may declare vehicles total losses at least in part due to cosmetic damage, it’s possible you’ll find some dirt-cheap rebuilt vehicles that work fine but merely look beat up. That said, unrepaired body damage shouldn’t make you drop your guard about other aspects that have been damaged and repaired (or not). In some states, rebuilt titles have much lower hurdles to clear.

Get As Much Information As Possible

The more you can determine about what led the vehicle to be totaled, and the repairs it received, the better off you are to decide if a rebuilt title is worth the risk. Start by asking the seller. The less he or she knows, regardless of the reason, the higher the risk to you.

Take advantage of free (VINCheck) and for-a-fee services (Carfax, AutoCheck and the National Motor Vehicle Title Information System) to see if you can find information about the vehicle’s origin state and history. You might find evidence of its earlier branding, be it a lemon, water or hail damage, odometer rollback or salvage. We flatly recommend against flood vehicles because the consequences can take months or years to surface.

All of these steps are meant to rule out bad choices. Unfortunately, nothing represents a clean bill of health because some vehicles slip through the cracks without proper titling, not all damage shows up in history reports, some titles get washed and some criminals go to great lengths — but most of them don’t. By doing some digging, you can greatly improve your odds.

We believe a pre-purchase inspection by an independent professional mechanic of your choosing is crucial for any used car, and that goes triple for a rebuilt one. If the seller refuses, do not proceed. Though these inspections can cost about $100, it’s worth the money in the long run, even if you have to do a couple of them to find the car you ultimately buy. Do the free and cheap research first and save this for the finalists.

Expect a Low Price Regardless

Even in the best circumstances, a vehicle with a rebuilt title is worth less than a normal one, and that’s what you should insist on paying. We can’t give you a target discount because there are too many variables, but suffice it to say a salvage-titled vehicle can be priced considerably below market value. Note that repairs can raise a car’s value, presumably within that range, but rebuilt and salvage cars are difficult to resell, period — and dealerships might not accept them for trade-in.

Buying any used car involves risk. Even if you do everything you’re supposed to do, an older car can develop costly problems, possibly out of warranty. And that’s if the car’s history has been faithfully recorded and made available to you. A rebuilt car might seem attractive if you think you know its full story and can get it insured, but go into it with your eyes open and demand an excellent deal.

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