While searching for a used car last year, I came across a title status I hadn’t seen before. Under the title, a box next to the word “rebuilt” was checked. I called up my mechanically inclined brother to ask about it. 

“A rebuilt title?” he said. “I don’t think you want to buy that.”

He elaborated, informing me that a rebuilt title meant the car was totaled at some point in its life. While this didn’t mean that the car wouldn’t run, it did mean that it had a much higher likelihood of hidden structural damage and other critical problems.

“Nine times out of ten,” he warned, “a rebuilt title is a terrible buy.”

If you’re a frugal buyer, you may be tempted by the deal you can get with a salvaged title car. And while there are many risks involved, it is possible to get a great deal. However, there are several special considerations you absolutely should make before deciding to purchase.

Don’t be fooled! This “good deal” can be way more costly than it initially seems. Read on to learn more about the risks involved when purchasing a rebuilt salvage vehicle.

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What does a rebuilt title mean?

Each state’s DMV will have a different definition of what constitutes a “rebuilt” title. Generally speaking, it will mean a car that has been satisfactorily rebuilt after the car was declared a total loss. When a car is damaged beyond 50 percent of its worth, it is generally deemed totaled and becomes a salvage car.

When a car is given a salvage title, it will need to pass a state inspection of its structural integrity before it can be deemed roadworthy. Once deemed roadworthy, it will receive a new title, usually called a “rebuilt” title. Be aware that some states, like New Jersey, use the term “salvage” to indicate a rebuilt title car. In Pennsylvania, the term “reconstructed” is used.

How much should I care?

In short, you should care a whole lot. On the one hand, rebuilt titles absolutely affect how you insure the vehicle. The value of the car is also affected: its resale value, trade-in value, and even the chance of resale.

On the other hand, a rebuilt vehicle may have undetectable frame damage, meaning the car’s safety can be jeopardized. Also, there is no way to repair a frame, so if the damage is later discovered, the car cannot be repaired. And even if the frame is not damaged, the car is more likely to develop mechanical and electrical problems after a rebuild.

If you’re car buying, there are several factors to scrutinize when looking at a rebuilt car. Failure to do so may mean buying an unsafe vehicle or one that will need many costly repairs.

Crucial considerations when buying a rebuilt car

You need a trusted mechanic.

That means someone you know and trust who is also a certified mechanic. If you don’t have anyone, ask your friends and family for a referral. This person will inspect the vehicle on your behalf.

Unfortunately, there are unscrupulous mechanics out there who will repair vehicles that aren’t worth repairing. Corners can be cut. For example, a fresh coat of paint could be covering up rust and other damage that will soon reappear.

Even if the mechanic who rebuilt is reliable, warning signs may have been missed. Anything that is clearly damaged will be replaced with new parts, but not all damage is obvious. Some may even be microscopic. That’s why it’s always to your benefit to have a used car inspected, but this is especially true if the car has been damaged.

You need more information about the car.

This includes:

  1. Full disclosure of the damage done to the vehicle. This can be obtained through the Department of Motor Vehicles. Bear in mind that this must be done through the state that the car was registered in.
  2. A complete list of repair work done to the vehicle. Look out for frame damage. You will also want to know who did these repairs. Once you know who, you can research their reputation.
  3. You should find out if there are any aftermarket warranties on the vehicles. Please note that nearly all manufacturer warranties, including extended warranties, are void after a salvage title.
  4. You should look up the value of the vehicle. You can find the valuation on a site like Kelley Blue Book. Expect the value of a car with a rebuilt title to be 20-40 percent less than the same car with a clean title.
  5. You should also get a CarFax report, which may be provided by the seller.

Discuss your findings with your mechanic. They can help eliminate duds and save you time in your search process.

You need to know if it was totaled due to flood or accident.

At first glance, flood damage might sound less threatening than an accident. However, this is not true. Water can cause just as much or even more damage. This is especially true for saltwater damage, as salt can corrode metal and electrical components.

A sure sign of water damage is funky smells in the interior or when using the AC unit. Funky smells mean bacterial growth or even mold.

You need to know you can find auto insurance.

It can be tricky finding an insurance company willing to insure a car with a rebuilt title. Especially when it comes to finding full or comprehensive coverage. If you absolutely must have full coverage, you should likely look elsewhere for your next vehicle.

Large car insurance companies are more likely to insure a rebuilt title. This is because they have a larger pool of customers and thus can handle the added risk. The following companies are known to offer at least liability insurance to rebuilt cars:

After finding the best price on car insurance from these companies with Insurify, be sure to speak to your insurance agent about the rules involved in insuring a rebuilt car. Your company may require its own inspection of the vehicle.

Buying with cash or a car loan?

Generally speaking, buying a rebuilt car with a loan is a bad idea. First, you will need either a specialized loan or a personal loan, as most banks will not offer an auto loan on a rebuilt car. Because of the higher likelihood that the car fails, the car may not last you through the life of the loan. And you’ll be on the hook for payments.

Do you want to be able to sell the car at a later date?

If you think you will want to sell the car in the future, a rebuilt car is probably not for you. They are extremely difficult to sell, and it’s unlikely you’ll get your asking price.

To buy or not to buy?

Full disclosure: there is virtually no situation under which I, personally, would purchase a vehicle with a rebuilt title. I think the financial and safety risks are too great.

That being said, there are some scenarios where the rewards may outweigh the risks.

It’s a classic car and you’re a collector

This is a totally different situation. Aficionados of classic cars have other priorities when it comes to car ownership. However, don’t forget that comprehensive coverage is difficult to find, meaning you may not be able to get insurance to cover any upgrades you make.

The car was totaled because of vandalism or hail

If someone smashed windows or the body is covered in many small dents, the most critical components of the car are more likely to be intact. For some insurance companies, like Progressive, you might even be able to get comprehensive coverage.

The car is for purposes other than your main vehicle

You may need a car for some purposes other than being the vehicle you use for day to day needs. If the reason for the vehicle lowers the risks involved, purchasing may be a good idea.

Your trusted mechanic is enthusiastic about the sale

If you have a thumbs up, you may want to buy. Just bear in mind that damages may not be apparent because they are microscopic. This means that as the car ages it becomes more and more likely to experience a critical failure.

Bottom Line

There are many financial and physical risks to consider when buying a car with a rebuilt title, and these risks should not be considered lightly. Speak with your trusted mechanic and ask for their advice. If you absolutely need a car and have very little money to pay for it, there are many options beyond a rebuilt car for you to consider.

Research is your best friend when buying any used car—including finding the best deal on your car insurance with Insurify. Be sure you do yours before you buy.

J.J. Starr is a financial copywriter and enjoys helping readers find the information they need. In addition to her background in banking and financial advising, she is also a poet with an MFA from New York University. She lives in Amherst, Massachusetts. You can learn more at jjstarrwrites.com.