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What Are Rebuilt Car Titles?

What is a rebuilt car title?
Austin Kilham
Austin KilhamUpdated December 19, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
When a car title is rebuilt, it means that a vehicle was once salvaged — or considered a total loss — but has since been repaired and is now ready to drive on the road. If a car is in an accident, flood, fire, or another situation that renders it unsafe to drive, it will receive one of a number of “branded” titles. A rebuilt title is one such branded title. It’s critical to understand how a car receives this title when you’re in the market for a car. Understanding the pros and cons of buying a vehicle with a rebuilt car title can help you make a more informed decision about your purchase.  

Understanding Rebuilt Car Titles

In order to understand a rebuilt car title, you must first understand salvage titles. When a car is damaged in an accident, disaster, or due to theft, the cost of repair is sometimes higher than the value of the vehicle. In this case, the insurance company might declare the vehicle a loss, branding it as “salvage.” Often, salvage cars are simply junked or used for parts. But sometimes, they may be repairable. The insurance company may sell the car to an auto repair shop or an individual who can rebuild the car. Once they do, and the vehicle passes an inspection that declares it safe to drive, the car can receive a rebuilt title. The vehicle can then be sold and registered in a new driver’s name.

How Do Rebuilt Car Titles Work?

The rebuilt title will remain with the vehicle for the rest of its days on the road and should be spottable on its title paperwork. The rebuilt title lets potential buyers know that the car has suffered significant damage in the past. This can help them understand what types of risks they may be taking on, and it can let them know to get the car thoroughly inspected by a trusted mechanic before buying it. Branded titles vary by state, and each one may have a slightly different definition. Check with your state’s department of motor vehicles (DMV) to learn more about laws in your area. Other common branded titles include junk, totaled, lemon, flood, and reconstructed.

The Impact of a Rebuilt Car Title on Car Value

A branded title of any kind will have an impact on the value of the vehicle. For example, a salvage or rebuilt title can reduce the cost of buying a used car. These cars can sometimes sell for 20% to 40% below the market value of comparable used vehicles. Why are rebuilt title cars so cheap? Buyers sometimes worry that the previous damage to the vehicle may cause future issues that could require costly repairs. It can also be more difficult to find financing and insurance for rebuilt titles.  It may be a good idea to have a private appraiser take a look at any rebuilt vehicle you’re considering buying to help ensure you’re getting a good deal. 

Pros of Rebuilt Titles

Some car buyers consider purchasing vehicles with rebuilt titles because they’re often cheaper than buying a comparable used car with a clean title. In the summer of 2022, the average cost of used vehicles was $10,046, according to data compiled by CoPilot. A rebuilt title car that goes for 20% to 40% less would cost between $8,036.80 to $6,027.60.In some cases, cars that are totaled and receive a salvage title may not have sustained much damage. For example, damage may be largely cosmetic. This provides an opportunity for buyers to acquire a car that’s still in good working order for cheap. However, you’ll want to carefully look into the damage history of the vehicle as you consider buying.   That being said, buyers can rest assured that a car with a rebuilt title has passed a state inspection that ensures it is safe to drive. 

Cons of Rebuilt Titles

You’ll want to carefully weigh the disadvantages of buying a car with a rebuilt title before making a purchase. A car that has sustained a lot of damage may still have unresolved issues that will lead to costly repairs down the road. Buyers could ultimately spend more than they would have buying a used car with a clean title. Cars with rebuilt titles also can be difficult to insure. Many insurance companies won’t offer insurance at all. Some may only offer liability insurance, which covers damage to other people’s property and persons, but does not cover damage to your car. It may also be difficult to find an auto loan, as the car may not meet the lender’s requirements for car loans. Lenders may worry that if a borrower defaults on their loan and they have to repossess the vehicle, the resale value may not be enough to cover their losses. It’s still worth checking with banks, credit unions, and private lenders to see what your options are. If you are able to find a loan, it will likely come with additional requirements, such as a higher credit score or proof of employment and income.To recap, here’s a side-by-side look at the pros and cons of rebuilt car titles: 
Pros of Rebuilt Car TitlesCons of Rebuilt Car Titles
Rebuilt titles may be 20%-40% cheaper than comparable clean title used carsRebuilt titles may require future repairs
Damage may not be extensive, leaving the car in relatively good working order Insurance companies often only offer liability insurance
Rebuilt titles have passed inspection, declaring them safe to driveIt may be difficult to find financing

Refinancing Rebuilt Car Titles

If you can secure financing, you may be able to later refinance your loan if your monthly payments become unmanageable, interest rates drop, or your financial situation improves. When you refinance, you pay off your old loan with a new one, usually with a lower interest rate or better terms. The interest rate you’re able to secure will depend largely on your credit score due to how car loans work. A higher score signals your creditworthiness to lenders. It shows that you have a good track record of paying your bills on time, and that you’re unlikely to default on your loan. Lenders will often offer the lowest interest rate to borrowers with the highest credit.Recommended: Financing a Car Loan With a Rebuilt Car Title

The Takeaway

Cars with rebuilt titles are safe to drive, and they can offer a cheaper alternative to other comparable used vehicles. But buyers must understand the potential risks and how those risks may affect their ability to insure and finance the vehicle. Be sure to research the history of a vehicle with a rebuilt title. You can get information from your state’s DMV, as well as online through car history sites, such as Carfax. If you’re looking to finance or refinance a vehicle, make sure to shop around for lenders to ensure you’re getting the most competitive interest rate. Lantern by SoFi offers a refinancing tool that can help you compare lenders, terms, and interest rates for refinancing a car loan. You can also get prequalified for loans — and when you choose a refinance loan, Lantern will work with your previous lender to pay off your loan and help you retitle your vehicle.See what refinancing rate you qualify for today!

Frequently Asked Questions

What is a rebuilt title for a car?
How do rebuilt car titles work?
How do rebuilt car titles impact a car’s value?

About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
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