What Is the Difference Between a Rebuilt Title vs. Salvage Title?
If you’ve recently been in a car accident and your car experienced damage, your insurance company may tell the state motor vehicle agency to change the vehicle’s title. Your vehicle can receive a salvage title, indicating that it’s a total loss, or a rebuilt title, indicating that it has suffered damage and undergone repairs.
Knowing the difference between these qualifiers can help you proceed strategically after your crash. It can also help you make a more informed decision about a future car purchase.
Read on to learn the difference between a rebuilt title vs. salvage title, then contact our Diminifax team to learn more about diminished value insurance claims.
What Is a Salvage Title?
A vehicle receives a salvage title when it is considered totaled — in other words, when the cost to fix the damage outweighs the car’s market value.
Vehicles often become totaled in accidents when they experience extensive damage that is too costly to fix. However, a car can also receive a salvage title if it experiences flood damage or fire damage. Vehicles can even receive salvage titles if they were stolen and recovered, as long as the original owner received compensation.
When a car experiences significant damage, the owner’s insurance company will take a closer look at the damage and determine whether it is a total loss. If it is, they will reach out to the state’s motor vehicle agency to change the title to a salvage title. Then, future buyers can see this information in the vehicle’s history and know that the car is unsafe to drive.
What Is a Rebuilt Title?
A rebuilt title is a legal document that indicates that a salvage car has been repaired. In many states, salvage cars can only receive rebuilt titles after passing a state inspection and a series of tests to ensure that they are completely safe to drive.
These cars must typically undergo expensive work to receive the “rebuilt” qualification. Once a vehicle receives a rebuilt title from the state motor vehicle agency, the owner can drive it on the road or sell it.
However, some states do not have as strict standards for providing rebuilt titles. As a result, a rebuilt title does not always indicate that a car is safe to drive or will not experience more issues down the line. For example, in some cases, this title simply means that a mechanic has fixed some of the vehicle’s issues.
Other Types of Titles
Each state offers slightly different titles for residents’ vehicles. A few of the most common include:
Clean Title
A clean title is the default title that all new cars receive. Cars can maintain clean titles unless they experience severe damage or receive one of the other qualifiers on this list.
Junk Title
A vehicle can also receive a junk title, which indicates that it is beyond repair. These vehicles cannot operate safely on the road and only hold value in their parts.
Lemon Title
Some states also offer a “lemon” title for vehicles, which indicates that they have too many malfunctioning parts to operate safely. Lemon titles differ from salvage titles because they do not always involve vehicle damage. Sometimes, a vehicle can receive a lemon title if it has simply outlived its usefulness.
Reconstructed Title
A car may receive a reconstructed title if a body shop has repaired a significant portion of its mechanics. For example, a vehicle may receive this title after a hobbyist fixes it up for personal use.
Odometer Rollback Title
Some people manually roll back the odometers on their vehicles before selling them to hide their high mileage. However, when a mechanic detects a manual rollback on a vehicle, they can request a rollback title to inform future buyers of this deceptive tactic.
How Does the Insurance Company Determine the Title?
When a car endures damage and its owner submits a claim to their insurance company, the insurer must determine how much money to pay the owner through their claim. One way they do this is by requesting a repair quote from a mechanic to determine how much it would cost to fix the vehicle. They then compare this quote to the car’s market value.
If a car requires repairs that equal between 70% and 90% of the car’s value, the insurance company can decide whether to deem it a total loss or give the vehicle owner the money to repair it.
Meanwhile, if the repair costs equal 100% or more of the car’s value, they would consider the vehicle totaled and ask the vehicle agency to give the vehicle a salvage title.
Should You Buy a Car With a Rebuilt or Salvage Title?
If you’re looking to purchase a used car, you should understand how a car’s title can impact its value, durability, and safety. Generally, you shouldn’t purchase a salvage vehicle unless you have extensive experience rebuilding cars. Salvage vehicles are unsafe to drive until they have undergone all necessary improvements.
However, you can consider rebuilt cars during your car search. These vehicles have been deemed safe to drive on public roads and may not look much different from clean vehicles on the outside. Still, we recommend asking a qualified mechanic to look over a rebuilt car before purchasing it to ensure that it is actually safe to drive.
Here are a few pros and cons of purchasing rebuilt vehicles:
Pros
Vehicles with rebuilt titles tend to be significantly cheaper than similar models with clean titles. If you’re looking to save money on a used vehicle, considering a rebuilt car could provide you with most of the benefits of a clean car for a fraction of the price.
You may also consider purchasing a salvage or rebuilt car if you enjoy fixing up cars. For example, you can turn a salvage vehicle into a project vehicle that you rebuild from the ground up. Of course, you should only attempt this if you have experience and training in car mechanics.
Cons
When you purchase a vehicle with a rebuilt title, you face the risk of the vehicle having issues down the line.
Even if a qualified mechanic has repaired the vehicle and it has passed an inspection, the repairs may not hold up as well as the original car mechanics would have. As a result, you may need to pay more in the long run to fix these problems than you would have paid to purchase a car with a clean title.
You may also need to pay for pricey insurance coverage when you purchase a vehicle with a rebuilt title. Some insurance companies hesitate to insure these vehicles because they are prone to problems. As a result, you may not have access to full coverage when you own this type of used car.
Altogether, even though buying a car with a rebuilt title may be more affordable upfront, you’ll incur additional costs throughout your ownership that may counter this benefit.
Does a Rebuilt Title Affect a Car’s Value?
Receiving a rebuilt title can significantly impact a vehicle’s value.
A rebuilt title indicates that the car has experienced serious damage. While the vehicle may be drivable now, it probably is not as reliable as it was before the accident. As a result, a rebuilt car can have a value of 20% to 40% less than a similar model with a clean title.
If you’re trying to sell a rebuilt vehicle, you may have trouble finding potential buyers willing to offer you enough money for your car. Buyers may hesitate to purchase a salvage or rebuilt vehicle because they fear it is unsafe.
If your vehicle recently experienced damage in an accident, you may be able to receive a payout from your insurance company for its diminished value. Contact our Diminifax team today to learn more about these insurance claims.