What You Need to Know About Rebuilt Title Car Value

You can usually pick up a car with a rebuilt title at a significant discount, making it extremely tempting to take advantage of the bargain. The question is whether there’s something lurking under the hood that can come back and bite you later.

In this article, we’ll tell you everything you need to know about vehicles with rebuilt car titles so that you can decide if it makes sense for you to buy a rebuilt title car or if you’re better off buying a vehicle without the stigma.

How Rebuilt Title Affects a Car’s Resale Value

There is no industry standard calculator to determine how much a rebuilt title car price drops compared to the value of a car with a clean title. However, as a general rule, you can expect the fair market value to drop by anywhere from 20% to 50%.

On average, a car with rebuilt title experiences an immediate 66% drop in value, making it worth only 34% of what it had been prior to receiving an altered status.

This price reduction reflects the risk the buyer takes on by purchasing a vehicle with a combination of known damage and the uncertainty of the quality of the repair work. For example, were new, branded parts used?

Most likely, the answer to this question is no. Often, the components used are taken from other salvage title vehicles, so the parts themselves could be at issue.

Calculating Rebuilt Title Car Value

The factors that go into calculating a car’s value after receiving rebuilt title include:

– Vehicle damage: As you can imagine, the more damage the vehicle sustained, the less it will be worth.

– The age of the vehicle: The newer the vehicle, the more dramatic the value decrease can be. It’s similar to the concept of the higher you fly, the harder you fall.

– The model of the vehicle: In-demand car models may drop minimally in value despite the title. Depending on the type of vehicle and the relative supply, the hit that the car’s vehicle value takes could be as little as 10%.

Similarly, luxury cars may be more adversely affected by rebuilt title or salvage title than a more practical vehicle like a truck or SUV.

– The quality of the parts used: The parts that the mechanic chooses to fix the car matter. If the parts are taken from a car that had flood damage, for example, this could further compromise the rebuilt title car price.

– Whether all repairs were made: Minor cosmetic defects might remain, substantially affecting the vehicle’s Kelley Blue Book value (even if the drivability remains uncompromised). When every imaginable repair is completed, the rebuilt car value will be higher than if some things were left untouched.

What Are Branded Title Vehicles?

Branded title is an umbrella term that encompasses a finding from the insurance company that the vehicle has been damaged to a point where it is a “total loss.” This term can be subjective, depending on what is wrong with the vehicle and how much the repairs cost relative to the vehicle’s pre-incident value.

Types of branded title include:

– Junk title

– Lemon title

– Buyback title

– Salvage title

– Rebuilt title

– Not actual mileage / odometer rollback

– Hail damage (this is almost always cosmetic only)

– Water damage

– Vandalism or theft

What is Rebuilt Title?

A rebuilt title occurs when the cost of repairing the car creeps up toward the total value of the car. At some point, it doesn’t make sense to repair something if replacing is around the same cost. Despite this rationale, there are two macroeconomic factors that have made the prospect of buying a rebuilt title vehicle more attractive:

1. Car manufacturing taxes the environment. Instead of scrapping a car at a junkyard and buying something new, people concerned with protecting the planet might opt to buy a rebuilt title car as a form of “recycling.”

2. There is a nationwide (if not worldwide as of July 2022) shortage of cars, with J.D. Power reporting that inventory is still at rock-bottom levels despite the end of the pandemic and increased production activity.

The shortage has caused the price of both new and used vehicles to skyrocket. This makes the concept of buying cars with rebuilt titles a practical necessity for budget-conscious consumers. This also means that if you are selling a rebuilt vehicle, you could potentially get a fair price and find that you get multiple offers from potential buyers.

Should You Try to Get Rebuilt Title for Your Vehicle?

You already know that rebuilt vehicles suffer a loss in value, but that doesn’t mean you should write them off completely. Car insurance companies use several variables when deciding whether a vehicle is a total loss, and the damage might not be severe enough to warrant scrapping it.

In addition to repairing them to drivable standards, you could even sell the car to another buyer and recoup some of the money you spent.

There are a couple of things to keep in mind with repairing a car to achieve a rebuilt title.

1. In addition to the cost of the parts, one also has to take into account the time it takes to repair the car and the expense and logistics of arranging alternative transportation in the meantime. The amount of money you spend here could eliminate the savings you would realize by keeping a car that has rebuilt title.

2. On the other hand, if financing a new vehicle is an issue, it could make sense to bite the bullet on the repair expenses, especially if you can do some of the work yourself or you can finance the repairs in a way that’s different than getting approved for a car loan (via a credit card, for example).

3. Some accidents effect a car’s value more than others. Even though repairs are made, t-bone accidents, and rear-end collisions generally affect more components and exert more force on the chassis than other types of accidents.

The situation becomes interesting when the damage estimate is due to cosmetic rather than mechanical issues. For example, older vehicles that sustained major dings and a few dents could cost a lot to repair compared to the actual value of the cars. That could end up resulting in them going to salvage auctions even though there’s nothing inherently wrong with the vehicle’s operation.

Rebuilt cars in this situation can give you the best of both worlds – you get a car for a low price, and you can be reasonably sure that nothing is wrong with the car other than a banged-up bumper.

From the standpoint of an insurance company, it’s a better economic decision to total the vehicle and give you an instant cash offer rather than spend thousands on a bumper replacement.

Often, the cars labeled as a rebuilt vehicle aren’t as old as you might think. After a car has its five-year birthday, it has a better chance of being salvaged and being eligible for a rebuilt title, even if the damage is relatively minor.

Rebuilt Title vs. Salvage Title

A car receives a salvage title when the repair costs are almost as high as the vehicle’s value. Often, this figure is 70% to 80%, and it can go even higher.

By definition, a rebuilt title car is one that received salvage title and was subsequently repaired. The repairs must be of high enough quality to pass a DMV inspection, but that doesn’t necessarily mean that they will hold up over time.

A car buyer will often think twice when they encounter a used vehicle that has been rebuilt. This is true even with dealership assurances, the ability to purchase full coverage insurance, and the promise that they can later sell the vehicle down the road.

Learn more about the differences between rebuilt and salvage titles >

Pros and Cons of Buying a Car with Rebuilt Title

A rebuilt title vehicle may never be as good as new, but that doesn’t mean they have no rebuilt title value. As long as you understand the situation you’re walking into, buying a salvage title vehicle or rebuilt vehicle can be a good decision.

Pros of Buying a Car with Rebuilt Title

There are some significant benefits to buying rebuilt vehicles, including:

1. You get a low price. Because the insurance company has declared the vehicle a total loss and dealerships minimize the trade-in value (or refuse to accept them altogether), you can buy these vehicles for a song. You’re probably going to get what appears to be a very good deal on the car, especially if you negotiate.

2. The car could still be highly functional. Just because the insurance company wrote off the car, it doesn’t mean that a rebuilt car is worthless. The insurance company might have decided that there was cosmetic damage not worth fixing, but the car might still be in great shape otherwise.

Cons of Buying a Car with Rebuilt Title

Even though buying or selling a rebuilt vehicle is an option, that doesn’t mean it’s right for everyone. Consider the following drawbacks:

– A rebuilt car has limited resale value

– There is a high risk of mechanical problems

– You may not be able to trade in the vehicle with a dealer

– A rebuilt salvage car is more difficult to sell

– There is a high potential that inferior parts are used (often from other salvage vehicles)

– You will likely incur higher maintenance costs

Should You Buy a Car with Rebuilt Title

By now, you know that the market value of cars with rebuilt titles is diminished, but that doesn’t mean you shouldn’t buy a salvage vehicle. If either of these scenarios applies to you, then a salvage vehicle that has been rebuilt may be a great fit:

– You have mechanical expertise and can confidently keep it running.

– You plan on keeping the car for a long time (until it “dies” or is no longer operable), so you’re not worried about resale value or the ability to do a trade-in.

– You are not concerned with selling the car later and recouping top value.

Tips for Buying a Car with Rebuilt Title

Before buying a salvage title car, make sure you get a copy of the vehicle history report so that you have a clear understanding of what is wrong with the vehicle and why the car ended up with salvage title in the first place.

You should also verify that the rebuilt title was issued in the same state where you plan on buying it. The reason is that the car has to pass a state inspection, and it might not have passed in the original state.

Consult a mechanic. Get a list of everything they perceive as wrong with the vehicle and a rough estimate of what the repair costs would be.

Determine whether it makes more sense to buy a comparably-priced vehicle that doesn’t have rebuilt title. A car value drops when there is a stigma of rebuilt title, so you will want to weigh the pros and cons listed above as you evaluate your best path forward when contemplating a rebuilt title car.

Do You Have Additional Questions About Rebuilt Title Value? Contact Us!

Buying or selling a salvage title car can get complicated. There are a lot of variables to consider, and you may need to consult with more than one expert to understand the whole gamut of your options.

There are also several lifestyle considerations to evaluate, including whether you want to be able to get a good trade-in value for your car, you want to drive with the protection of full coverage insurance, or having a car with high resale value is important. We’re happy to answer any questions. Contact Diminifax today.

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