Some of you out there like to buy and sell vehicles. If you do it long enough, you’ll probably come across titles that aren’t exactly “clean.” Yusuf (@RideWithYusufb) does a nice job breaking down the salvage process in this video, which we summarize below.
Salvage vs. Rebuilt Titles
Salvage Title: This is issued when an insurance company deems a vehicle a "total loss," typically meaning the cost of repairs exceeds 75% of the car's value. Cars with salvage titles cannot be insured, driven on public roads, or registered with license plates. (Typically it’s a 75% threshold, but this specific percentage varies by state and insurance provider.)
Rebuilt Title: This title is given to a salvage vehicle that has been fully repaired and has passed a state or DMV inspection. Once a vehicle receives a rebuilt title, it is considered roadworthy again.
Key Considerations for Buyers
Insurance & Financing: Contrary to popular belief, you can get full coverage insurance on rebuilt title vehicles. Additionally, some banks will finance these cars, provided the loan-to-value ratio makes sense (but it’s often more difficult and expensive than for clean-title cars).
Value Potential: Rebuilt title cars can be a great way to save money, as they are often priced significantly lower than their clean-title counterparts. Sometimes cars are totaled for minor issues (like fender benders) simply because an insurance adjuster overestimated the repair costs.
Due Diligence: Definitely get a thorough Pre-Purchase Inspection (PPI) to ensure the car is mechanically and structurally sound.
The "Deal" Factor: A rebuilt title is only a good value if the price reflects its status. Don’t buy a rebuilt title car if the seller is asking a clean-title price.
Final Verdict
Buying a rebuilt title car is a viable option for those planning to keep the vehicle for a long time (5-6 years), as long as they do their due diligence and understand that the car may be harder to resell later. Also, there is always a risk that a previously totaled car may have underlying safety issues.
And for the car flippers out there, be warned: selling salvage title vehicles can take a lot longer than you think.
Thanks for reading everybody!
-Paul