Many people are confused about the differences between a reconstructed versus a salvage title. This necessary document to prove vehicle ownership has caused stress and headaches for car owners, and we are all very aware of the difficulties of working with the DMV.
Simply put, a vehicle with a salvage title is not roadworthy and isn’t legal for street use. A reconstructed title (sometimes referred to as a rebuilt title) is issued after a severely damaged vehicle has undergone extensive and fully documented repairs and has passed a DOT inspection.
If you’re considering purchasing a vehicle with a reconstructed or salvage title, it’s important to know what you’re buying. If your vehicle has one of these titles, it could prove to be difficult to find a buyer. In this article, we’ll discuss the differences between these two types of titles.
The Differences Between Rebuilt and Salvage Titles
Vehicles with rebuilt or salvage titles have one thing in common: at one point in time, they were either in a major accident or suffered some type of damage, possibly caused by extreme weather. Both of these types of titles can cause problems for owners whose objective is to sell them. However, selling a vehicle with a clean title is much easier than those with rebuilt or salvage one.
What Does Reconstruction Mean on a Title?
What does a reconstructed title mean? A reconstructed title or rebuilt title, much like a salvage title, means that at one point the vehicle experienced extreme damage and was deemed undrivable. However, vehicles with a reconstructed title have undergone extensive, documented repairs and have passed a DOT inspection. Vehicles with a reconstructed or rebuilt title can be legally driven and are considered safe and fully repaired.
What Does Salvage Mean on a Title?
If a vehicle is damaged so severely that the insurance company deems it as totaled, it will be issued a salvage title. To be considered a total loss, the guidelines can be different depending on the insurance company’s terms and sometimes the laws of the state where the vehicle is registered.
Typically, if the cost of the repairs is greater than the value of the vehicle, the insurance company will refuse to pay. They’ll then declare the vehicle as totaled, and a salvage title will be issued for the vehicle.
What Are the Pros and Cons of a Rebuilt Title?
Many car sellers and car buyers are confused about a vehicle that has a rebuilt title. Popular opinion says that a rebuilt or reconstructed title is bad news. There is a bit of truth to this, but it doesn’t always hold true. The benefit or misfortune of a rebuilt title solely depends on what you plan to do with the vehicle.
Pros of a Rebuilt Title
If you’re the owner of a vehicle with a rebuilt title, the good news is that it’s legal for street use. Once its title changes from salvage to rebuilt or reconstructed, this means that it has passed your state’s DOT requirements and is safe to drive.
For buyers, purchasing a vehicle that has a rebuilt title usually has a lower asking price than one with a clean title. This is because its rebuilt title is proof that at one time it required a lot of maintenance to get it back to a sale and operable condition. There’s much more wiggle room for negotiations on vehicles with a rebuilt title.
Another plus of purchasing a vehicle with a rebuilt title is that, in some cases, the reason the vehicle was declared a total loss by the insurance company wasn’t as bad as you would think. An example of this would be if the vehicle didn’t sustain any substantial structural damage, but the insurance company still felt the expense was too great to make the necessary repairs.
Vehicles with a rebuilt title can be a great source of parts. Although they’re legal for street use, a savvy mechanic could make much more money by selling the car’s parts. Since cars with this type of title generally sell far below their market value, the part’s value could easily outweigh the cost of purchasing.
Cons of a Rebuilt Title
Owners with a vehicle with a rebuilt title could have problems when it comes time to sell. Buyers will negotiate hard for a lower price since this type of title is proof of extensive previous damage. Selling a vehicle with this type of title could prove to be difficult. Sometimes the only option is to sell it to a company that purchases junk cars.
Although vehicles with a rebuilt title have to pass a DOT inspection to change their titles from salvage to rebuilt, you’ll need to maintain caution when purchasing. Unscrupulous sellers could very easily get the vehicle to a state where it passes DOT inspection and then remove any expensive parts and replace them with substandard ones.
For car buyers who have very little knowledge of auto mechanics, purchasing a vehicle with a rebuilt title is a no-no. Without knowing the ins and outs of cars, a vehicle with existing damage can easily be hidden. If you’re considering a purchase like this, it’s best to bring along a certified auto mechanic who knows what to look for during a used auto inspection.
Some insurance companies won’t grant full coverage insurance to cars with a rebuilt or reconstructed title. This can vary by company and also by state. Most buyers of used cars don’t carry full coverage insurance, but it’s best to know that if you do make the purchase, you may only be able to purchase the most basic of insurance policies.
Most car dealerships won’t accept vehicles with a rebuilt title as a trade-in for a new car. Even if the vehicle runs great and has no mechanical or structural issues, many dealerships have a strict policy of not allowing them to be used for trade-ins.
What Are the Pros and Cons of a Salvage Title?
Vehicles with a salvage title cannot be driven on public roads legally. They’ve been deemed by the insurance company to have extensive damage that isn’t worth investing the money to repair. However, with that being said, there are still some advantages to owning a vehicle with a salvage title. And along with the good, there’s always some bad.
Pros of a Salvage Title
If you’re in possession of a vehicle with a salvage title, there are a few advantages. The most obvious is that you own the vehicle, and it does have some value. The easiest way to sell a vehicle like this is to sell it to a business that specializes in purchasing junk cars.
If you find a used car you’re interested in and it has a salvage title, you can most likely get it for far below its market value. Backyard mechanics or those who enjoy tinkering with cars can save a lot by purchasing one that has a salvage title. This can be an inexpensive way to maintain an expensive hobby.
Many vehicles that have a salvage title may not require a lot of time, effort, or money to repair. The reasons an insurance company would deem a car “unfixable” are many, so not all vehicles with a salvage title are not worth repairing.
Cons of a Salvage Title
The biggest con of a vehicle with a salvage title is that by law it’s not legal to drive. Vehicles with a salvage title will first need to be repaired and then must pass a DOT inspection before they can be driven on public roads.
Automobiles with a salvage title can be difficult to sell. Since this type of title signals buyers that it’s considered unsafe to operate, they typically have very little value. Once a vehicle is branded as salvage, this stigma will follow it forever, even if converted to a rebuilt title. In other words, it will never have a clean title.
It can sometimes cost an arm and a leg to repair a vehicle with a salvage title. This will obviously depend on the type of damage, but in most cases, repairs will be costly to get the vehicle back on the road.
Most insurance companies won’t write any type of policy for cars with a salvage title. Even if you’re lucky enough to find a carrier willing to write a policy, it’ll most likely come with an incredibly high premium.
What’s Required to Have My Car Earn a Rebuilt Title?
Each state has different requirements for what’s required to have your vehicle go from salvage to a rebuilt title. Some states have incredibly strict and difficult-to-obtain rules, so it’s best to inquire with your state’s DOT to see exactly what you’ll need to do. It generally involves a lot of paperwork and can prove to be daunting.
In general, here’s what’s required:
- Repair the vehicle to DOT safety standards
- Vehicle inspection by an authorized third-party or state-operated DOT
- Authorized statement of all repairs
- Proof of ownership
It should be noted that vehicles with a salvage title cannot be legally driven on public roads. This will require it to be towed to an authorized third-party or state-operated DOT inspection facility. Failure to do so could result in fines and refusal of inspection.
Once you’ve gathered up all of the required documents, you’ll need to submit them to your state’s Department of Motor Vehicles. Depending on the state, this will most likely result in filing out more paperwork and paying the appropriate filing fees. Unfortunately, this part of the process can sometimes prove to be frustrating.
Is a Rebuilt Title Bad?
The answer to this question depends on what your long-term plans are for the vehicle. If you’re the seller, you most likely won’t get a lot for the vehicle since it’s already branded as one that’s had extensive damage. It won’t matter if it’s been fully repaired and DOT approved, and buyers are aware they can push for the lowest price possible.
Buying or owning a vehicle with a rebuilt title is best when you’re going to keep it for a long time. As discussed, resale values are low. However, the vehicle is legal for use on public roads, so if it’s going to be used as a beater or commuter car, what type of title it has isn’t of much significance.
What Should I Look for When Buying a Vehicle With a Rebuilt Title?
Purchasing a vehicle with a rebuilt title can be a risky endeavor. However, knowing what to look for and what to ask can significantly lower the risks involved.
Speak Directly With the Owner
Speak with the owner of the vehicle and ask about what the exact damage was to the vehicle. Having a good idea of what the extent of the damage was and why the vehicle was deemed totaled can give you some good information. If most of the repairs were cosmetic, you may have less to worry about.
Ask to See All Documentation of Repairs
Don’t take the seller’s word that all repairs were performed or that everything that was replaced is still installed in the vehicle. It’s a wise move to have the seller physically show you what was replaced or repaired and have them back it up by showing you the receipts for the work performed.
Inspect and Test Drive the Vehicle With a Licensed Mechanic
An inspection of the vehicle and a test drive is a normal part of any used car sale. If possible, bring along a licensed mechanic or schedule an appointment to have a garage take a look at the vehicle before you make any agreements about purchasing. Unless you’re a gearhead, you may not see obvious existing mechanical problems.
What to Do if You Can’t Sell Your Vehicle With a Rebuilt or Salvage Title
If you’re having problems getting buyers interested, sometimes it’s better to just throw in the towel and contact a business that specializes in buying junk cars.
They’re comfortable purchasing vehicles with a troubled past, and in the long run, can make the process of selling yours much less painful
