Definition and Examples of a Rebuilt Title
A new automobile comes with a “clear” or “clean” title—a designation that indicates it has never sustained any significant damage. A clear title can apply to a financed car or one that you own outright. When a car sustains significant damage in a traffic accident or from a different type of event, such as a flood, theft of parts, or vandalism, the insurance company may consider it a total loss. If this is the case, repairing the car is considered to be more costly than getting rid of it. In most cases, the carrier will offer you a settlement and take possession of the vehicle. To recoup its loss, the provider may decide to sell the totaled car to a business that rebuilds vehicles. When selling a totaled car to a rebuilder, most states issue a “salvage” title to the new owner. This designation can inform future buyers that the car was once considered a total loss. When a business or individual successfully rebuilds a car to the point where it can hit the road again and it passes required inspections, they can resell the vehicle. With this type of transaction, the state will issue a “rebuilt title” to the new owner. So, a rebuilt title indicates that an insurance company once considered the car a total loss, but the car was then reconstructed to a condition that passed a state inspection.
Alternate names: Restored salvage title, branded title, reconstructed title
How Does a Rebuilt Title Work?
When builders restore a vehicle with a salvage title to working condition, they must have the vehicle inspected before they can resell it. In some states, a rebuilt car must pass a more rigorous inspection than one that has a clean title. In most cases, only a legally authorized inspector—usually a specially trained government employee—can conduct the inspection. The inspector may perform a bumper-to-bumper inspection. This includes testing the vehicle’s horsepower and examining parts such as lights, mirrors, tires, and wheels, along with parts permanently affixed to the car, such as bolts, brackets, and welds. The tests will determine if the car meets the state’s vehicle code. If the car passes inspection, it’s viewed as ready for the road and eligible for a rebuilt title. The inspection and recertification processes, and the fees they incur, vary by state. After recertification, the rebuilt designation will remain with the vehicle to alert future buyers of its damage history. Some states brand rebuilt titles with the type of damage the car sustained, such as fire, flood, or water damage, as is the case in Georgia. A rebuilt title may also indicate that the car was once considered junk, salvage, or that it was dismantled. Due to safety concerns, many insurance companies won’t provide collision or comprehensive coverages or optional coverages, such as rental car reimbursement or roadside assistance, for cars with rebuilt titles.
Rebuilt Title vs. Salvage Title
Rebuilt titles and salvage titles have some similarities, but each applies at a different stage of the reconstruction process.
Cons Explained
Difficult to insure: Many companies won’t insure a vehicle that has a rebuilt title. And those that do likely won’t offer property coverages such as collision and comprehensive. So, if you’re in an accident, you’ll have to pay repair costs out of pocket. Difficult to obtain financing: Cars certified as salvage have no Blue Book value. Although a car with a rebuilt title has been restored and has passed state inspection, lenders may decline to finance it. Lenders may also decline to finance a restored vehicle because they question its repair history or ability to function on the road. Lenders that do finance cars with rebuilt titles often charge high interest rates and only offer short-term loans. Low market value: Since cars with rebuilt titles have a troubled history, they typically don’t have a good resale value. In most cases, car dealers won’t accept a rebuilt car as a trade-in because they can’t quickly sell it.
