Purchasing a used car is always a bit of a gamble. You don’t know how the previous owner treated it or if there are any hidden issues. This uncertainty increases exponentially when looking at rebuilt and salvage title vehicles. But while they make some buyers nervous, others see rebuilt and salvage cars as an opportunity to save money on a functional set of wheels. This guide will walk through the key differences between rebuilt and salvage titles so you can decide if one of these discounted rides is right for your needs.
What is a Salvage Title?
A car is issued a salvage title when an insurance company declares it a “total loss.” This usually happens when the estimated repair costs exceed around 75% of the car’s pre-damage value. For example, if a car worth $20,000 sustains $15,000 in damage, the insurer would likely deem it a total loss and take possession of the vehicle.
The insurance company would then sell the salvaged car at auction. Buyers are typically auto parts companies, scrap yards, or individuals looking to rebuild and resell the car. The vehicle’s title is branded as “salvage” to alert future owners that it has sustained significant damage.
Salvage titles stay with the car indefinitely – even after repairs bring it back to working order. This helps prevent the unethical practice of hiding a vehicle’s accident history from consumers. So if you see a salvage title, you know that car has been through major repairs.
What is a Rebuilt Title?
A rebuilt title is issued for a salvaged car after it has been repaired and inspected to confirm roadworthiness. The process varies by state but generally involves:
- Completing all necessary repairs
- Getting the car reinspected and approved by the Department of Motor Vehicles
- Passing a new vehicle safety inspection
- Providing proper documentation of the repairs
If everything checks out, the DMV will re-title the car with a “rebuilt” or “reconstructed” brand. This indicates the car sustained considerable damage but is now deemed roadworthy again.
Rebuilt titles function similarly to salvage titles in alerting buyers to the car’s accident history. The title remains branded even after changing owners. While the rebuilt designation is better than a salvage brand, it still negatively impacts the car’s value.
Key Differences Between Salvage and Rebuilt
The main differences between salvage and rebuilt titles come down to roadworthiness and value impact:
- Salvage means not roadworthy – A car with a salvage title is not legally drivable. Significant repairs are still needed to make it safe and operable again.
- Rebuilt means roadworthy – The rebuilt title shows the necessary repairs were completed and the DMV approved the vehicle for road use.
- Salvage has higher depreciation – An unrepaired salvage car tends to be worth only a small fraction of its pre-damage value. Parts and scrap yards may pay cents on the dollar.
- Rebuilt depreciates less – While still much lower than a clean title, a rebuilt car typically retains a bit more value. Having the work completed saves future owners repair costs.
So in summary:
- Salvage title = not roadworthy, more depreciated
- Rebuilt title = repaired and roadworthy, less depreciated
Should You Buy a Salvage or Rebuilt Title Vehicle?
Deciding if a salvage or rebuilt title car fits your budget and transportation needs requires careful consideration:
The Pros of Salvage/Rebuilt Vehicles:
- Major savings – The deepest discounts on used cars come from rebuilt and salvage title vehicles. Expect to pay 25-50% less than clean title vehicles.
- Newer cars for less – Since any model year car can be totaled, salvage/rebuilt titles provide access to newer vehicles for lower prices.
- Great project car potential – Auto enthusiasts looking for a fixer-upper can benefit from the lower salvage car prices.
The Cons of Salvage/Rebuilt Vehicles:
- Safety concerns – Severe accidents that total cars can lead to unseen frame/mechanical issues. Extra inspections are recommended.
- Inability to resell – These branded titles severely hurt resale value down the road. Expect to take a big loss selling.
- Insurance difficulties – Some carriers won’t insure salvage or rebuilt cars. Those that do charge significantly higher premiums.
- Repair uncertainty – With rebuilt cars, you don’t know the full extent of previous damage or quality of repairs. Poor workmanship can be hidden.
- Stolen parts – Crooked rebuilders sometimes use stolen parts to piece cars back together on the cheap. This can lead to legal issues.
As you can see, there are compelling pros and cons to weigh with rebuilt/salvage vehicles. They can provide huge savings, but also carry considerable financial and safety risks.
Inspections to Consider for Salvage/Rebuilt Cars
If you decide to go the salvage or rebuilt route, protect yourself by having the car thoroughly checked out first. Don’t rely solely on the rebuilt title as proof that everything is sorted. Consider paying for the following inspections:
Professional Pre-Purchase Inspection
A seasoned mechanic should perform a bumper-to-bumper inspection looking for:
- Overall repair quality
- Signs of unrepaired or improperly repaired damage
- Indications of crashed/replaced parts
- Mechanical issues or premature wear
Expect to pay $100-$200 for a pre-purchase inspection, but the peace of mind is priceless.
Body and Paint Analysis
Since rebuilt cars often have bodywork done, it’s smart to have a body shop look everything over. They can spot:
- Incorrect panel alignment
- Poor fitment of body parts
- Signs of structural repairs
- Aftermarket/non-OEM parts
- Inadequate rust protection
Again, you’ll typically pay around $100 for these professional eyes.
Professional Appraisal
Consider hiring an auto appraisal service to assess the car’s value and condition. They will essentially recreate the original total loss appraisal to see if the repairs equate to the required percentage of pre-damage value. This provides a neutral third-party perspective.
While pricier at $200-$300, an appraisal can confirm you’re getting a fair deal. It also gives ammunition to negotiate the purchase price if the repairs fall short.
By making a modest upfront investment in inspections, you can gain peace of mind in your rebuilt or salvage purchase. Or, the inspections may reveal facts that convince you to pass altogether. Either way, professional eyes help you go in with the right information.
Steps for Safely Purchasing a Salvage or Rebuilt Car
To recap, follow these steps when looking at a rebuilt or salvage title vehicle:
- Research value – Use NADA Guides clean trade-in value as a baseline, then deduct 25-50% for the branded title. This gives you an idea of reasonable pricing.
- Verify VIN – Cross-reference the VIN with vehicle history reports to confirm it’s not stolen and matches the title.
- Review title docs – Look for state markings, correct info, and no signs of title washing.
- Complete pre-purchase inspection – Pay a mechanic to thoroughly inspect the vehicle before purchase.
- Assess body repairs – Have a body shop evaluate the fit and finish of repaired panels.
- Consider an appraisal – Hire a professional appraiser to judge repairs versus vehicle value.
- Test drive extensively – Spend at least 20-30 mins driving at different speeds, listening for noises, etc.
- Price negotiably – Use inspection findings to negotiate the fair purchase price down as needed.
- Purchase insurance ahead – Contact carriers to lock in coverage before finalizing the sale.
- Transfer title promptly – Fill out transfer paperwork and submit the title to the DMV right away.
By following these key steps, you can feel confident making a rebuilt or salvage purchase. Taking the right precautions goes a long way toward getting a functional used car at a discount, while avoiding expensive pitfalls.
Alternatives to Consider Over Salvage/Rebuilt
Purchasing a previously wrecked vehicle still gives some buyers pause. If you want more peace of mind, consider these alternatives:
Well-Maintained Older Cars
Instead of a 3-5 year old rebuilt car, look at clean titled 8-10+ year old vehicles. The depreciation curve has flattened out, so you can get an economical used car with less uncertainty.
Leasing Return Vehicles
Off-lease cars coming back from 2-4 year leases can offer the look/feel of a newer car without the risk of rebuilt titles. Since they must be returned in good shape, they tend to be well-maintained.
High Mileage Gems
Consider seeking out an older car with over 100k+ miles but no accident history. Higher miles scare some buyers away, letting you negotiate for an aging yet reliable vehicle.
Buy Here Pay Here Lots
If you need flexible financing, buy here pay here (BHPH) dealers provide their own in-house financing with limited credit checks. Just be cautious about ultra-high interest rates.
Save Longer for a Clean Title
Finally, always try to save up a few extra thousand to reach clean titled vehicles. Your future resale value will thank you.
The Takeaway – Assess the Total Value
At the end of the day, rebuilt and salvage title vehicles require accepting more uncertainty to gain big short-term savings. Make sure you:
- Have the car thoroughly inspected by professionals
- Use their objective insights to negotiate a fair price
- Weigh if the long-term resale limitations are acceptable
If you take the right precautions, a rebuilt or salvage title car can provide affordable transportation. Just be sure to enter with eyes wide open to the risks and trade-offs involved. Consistently maintaining your diligence as a consumer is the key to success.
