What Is a Rebuilt Title?

Cars with rebuilt titles have a checkered history. The "rebuilt" certification indicates that a vehicle was previously salvaged (considered a total loss), but has been restored and is now roadworthy.

A rebuilt title indicates that the vehicle has had a troubled past. The "rebuilt" certification indicates that a vehicle was once salvaged—considered a total loss—but has been restored and is now roadworthy.

Definition and Examples of a Rebuilt Title

A new car comes with a "clear" or "clean" title, which indicates that it has never had any significant damage. A clear title can apply to a financed or outright owned vehicle.

When a car sustains significant damage in a traffic accident or from another type of event, such as a flood, part theft, or vandalism, the insurance company may declare it a total loss. In this case, repairing the car is thought to be more expensive than getting rid of it. The carrier will usually offer you a settlement and take possession of the vehicle.

To recoup its losses, the provider may decide to sell the totaled vehicle to a vehicle rebuilding company. When a totaled car is sold to a rebuilder, most states issue the new owner a "salvage" title. This designation can alert potential buyers that the vehicle was once considered a total loss.

• Vehicles with a history of minor fender benders are not eligible for rebuilt titles. It only applies to vehicles that were previously deemed a total loss.

When a company or individual successfully rebuilds a car to the point where it can be driven again and passes all required inspections, the vehicle can be resold. The state will issue a "rebuilt title" to the new owner in this type of transaction. A rebuilt title indicates that the car was once considered a total loss by an insurance company, but it was then rebuilt to pass a state inspection.

• Alternative names: salvaged title, branded title, and reconstructed title.

How Does a Rebuilt Title Work?

When builders restore a salvage title vehicle to working condition, the vehicle must be inspected before it can be resold. In some states, a rebuilt vehicle must pass a more stringent inspection than a vehicle with a clean title.

Only a legally authorized inspector—usually a specially trained government employee—can conduct an inspection in most cases. A bumper-to-bumper inspection may be performed by the inspector. This includes testing the vehicle's horsepower and inspecting parts like lights, mirrors, tires, and wheels, as well as parts that are permanently attached to the car like bolts, brackets, and welds. The tests will determine whether the vehicle complies with the state's vehicle code.

If the vehicle passes inspection, it is considered roadworthy and eligible for a rebuilt title. The inspection and recertification processes, as well as the fees associated with them, differ by state. The rebuilt designation will remain on the vehicle after recertification to alert future buyers of its damage history.

Some states, such as Georgia, brand rebuilt titles with the type of damage the car sustained, such as fire, flood, or water damage. A rebuilt title may also indicate that the vehicle was previously considered junk, salvage, or was dismantled. Many insurance companies will not provide collision or comprehensive coverages, as well as optional coverages such as rental car reimbursement or roadside assistance, for cars with rebuilt titles due to safety concerns.

• The laws governing rebuilt titles differ from state to state. Some states may restrict rebuilt titles based on the age or resale value of the reconstructed vehicle. In Washington, for example, a vehicle may only be rebuilt if it is five years old or younger.

Rebuilt Title vs. Salvage Title

There are some similarities between rebuilt and salvage titles, but each applies at a different stage of the reconstruction process.

Pros and Cons of Buying a Car with a Rebuilt Title

Pros Explained

If you're looking for a used car, you might be able to get a better deal if you buy one with a rebuilt title. However, keep in mind that, while the vehicle passed inspection, its previous condition may result in higher-than-average repair costs in the future. You might want to seek advice from an industry expert or a friend who is well-versed in the subject. If you have no experience working on cars and need a reliable set of wheels, a car with a rebuilt title might not be the best option.

Cons Explained

Difficult to insure: Many insurance companies will not insure a vehicle with a rebuilt title. Those that do are unlikely to provide property coverages such as collision and comprehensive. So, if you're in an accident, you'll have to pay for repairs yourself.

Difficult to obtain financing: Cars certified as salvage have no Blue Book value. Despite the fact that a car with a rebuilt title has been restored and passed state inspection, lenders may refuse to finance it. Lenders may also refuse to finance a restored vehicle if they have concerns about its repair history or ability to operate on the road. Lenders who do finance cars with rebuilt titles frequently charge exorbitant interest rates and only provide short-term loans.

Low market value: Because cars with rebuilt titles have a troubled history, they rarely sell for a profit. Most car dealers will not accept a rebuilt car as a trade-in because they cannot sell it quickly.