What is a Rebuilt Title and How Much Does It Devalue a Car?

  • by: Sibora
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August 11, 2021
When buying or selling a used vehicle with a rebuilt title, you need to know all the specifics. Purchasing a branded title car or truck can help you save a lot of money but do your research first; there are a few aspects you will want to consider first. 

A rebuilt title can devalue a car by 20-50%, depending on the condition of the rebuilt vehicle and the age. It’s essential to understand how a rebuilt title affects car insurance and how it differs from a salvage title vehicle.

How is a Rebuilt Title Vehicle Worth?

A study in 2015 revealed that a rebuilt title would lose around 66% of its resale value. That means even if you spend the time and money rebuilding the car back to factory-ready standards, you will only see around 34% of the wholesale value. That is an average, but it’s important to note that many factors will affect the value of a car with a rebuilt title. Other experts claim that the degree to which a car loses value after being rebuilt may be between 20-50% of fair market value.

Different types of vehicles will also fetch better or worse prices. For example, a mid-sized car or truck and SUVs retain a higher value than luxury vehicles. Take into consideration the age, make, model, manufacturer, and availability of the vehicle you are selling. If it’s hard to find a year/make/model, you may get lucky and find a buyer dying for that specific one who doesn’t care that it was rebuilt. 

How Much Does a Rebuilt Title Devalue a Car?

What is the Difference Between Salvage and Rebuilt Titles?

Each individual state has different laws defining what they consider to be salvage or a rebuilt title car. However, both are vehicles that have been in a severe accident where the insurance company deemed them a total loss. When that happens, they are issued a salvage title and may not be driven on the road or registered legally. Most salvage title cars end up in junkyards or salvage shops for parts. 

However, if someone decides to rebuild the car or truck back to perfect working condition, they can. The state agency (typically, a department of motor vehicles - DMV) will send someone out to thoroughly examine the repairs, test the car for safety and roadworthiness. Then if it passes, they may issue it a rebuilt title. Even if the vehicle is perfect in every way, the rebuilt title simply informs the buyer that the car was previously damaged and labeled a “total loss” before it was repaired.

When a car has been rebuilt, it does not mean that every part has been replaced. It simply means that it has been restored to a legally safe vehicle to drive and it has been inspected by the DMV before being sold.

How to Sell a Car With a Rebuilt Title

Selling any used car is tricky but selling a rebuilt title may be much harder. Most buyers want a used car with a clean title and no imperfections. However, some more discerning customers may be interested in the deep discount offered by purchasing a rebuilt title car.

Before deciding to rebuild a car and then sell it, check the Kelley Blue Book (KBB) to see what the vehicle is worth under certain conditions. That will give you a benchmark to know where you might be profit-wise.

The resale value of these rebuilt vehicles tends to be quite a bit lower than cars without a branded title. If you can easily absorb the loss, then it might make sense. For example, if you have access to a junkyard where you can get spare parts for free, you may end up making a buck or two on the deal. If you plan to keep the car, think about auto insurance and make sure you can get full coverage or even comprehensive coverage for it.

Consider your pool of potential buyers and set your pricing according to that. If you have a lot of interested parties, you may be able to price the vehicle higher than if no one wants it. 

Should You Buy a Car with a Rebuilt Title?

Many people just want to visit a dealership and buy a new car. If cost is an issue, however, you may have to settle for something less. A used car is always an option, but you may want to consider a rebuilt title car if you need to save a lot of money. The deep discounts may be worth it if the vehicle has been adequately rebuilt to reflect a decent used car.

Some things to keep in mind when buying a rebuilt vehicle are:

  • Some insurers won’t allow you to insure the vehicle if it is rebuilt. Check with your insurance company before buying.
  • You may have trouble getting a car loan for a branded title vehicle.
  • If you buy a new car later, your rebuilt car may have no trade-in value at all.
  • The vehicle will most likely not come with any warranty.

When thinking about buying a rebuilt title car:

  • Check the book value on the vehicle you are interested in to see what it would be worth without the rebuilt title and decide if it is a good deal or not. 
  • Find out what kind of damage the car incurred (flood damage, fire, etc.) before examining the vehicle. You may be more comfortable with certain types of vehicle damage than others. Some things are easier to repair. 
  • Make sure the vehicle will pass a state inspection. 
  • See if there are any similar vehicles in your area to compare the rebuilt salvage car to.
  • Talk to your insurance company to see if they can provide you with a valuation of what the car or truck should be worth before buying so you can negotiate. 
  • Use the vehicle VIN to pull a vehicle history report and see as much information as you can about the car before buying. 

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Buying or selling a vehicle with a rebuilt title has its challenges. However, a buyer may end up paying a lot less for a great, roadworthy car, and the seller just might make a profit on a weekend project they invested in.