Pros and Cons of Buying a Car with a Rebuilt Title

When it comes to finding a great price for a car, one with a rebuilt title could be the lowest that you find. There are plenty of people that don’t know anything about rebuilt titles, and I want to help out.

Generally, the benefits revolve around the low price of a rebuilt car. You can go through extra checks and inspections to lessen your chance of getting a lemon in exchange for a super low sticker price. As far as the negatives, they all come with the uncertainty of the deal. You don’t know what really happened, what the rebuilding process looked like, and how far the car will go before falling apart.

In this guide, I’ll explain everything you need to know. I’ll talk about the title, what it means, and some major pros and cons of buying a car with a rebuilt title. Hold off on purchasing that car until you make it to the end of this guide.

What Is a Car’s Title?

A car’s title can be compared to the deed of a house. It shows who the legal owner of the vehicle is, and it shows that the deal was done legally in the first place.

It gets processed through your specific state’s Department of Motor Vehicles, and it gets registered through the federal government. They’re technically issued by the Secretary of State for your state.

If you want to sell a car, you need to transfer the title over. If you’re buying a car from a private seller, you’ll need to get the title transferred to you.

The Difference Types of Titles

In general, there are ten types of titles that you might find on a car. A lot of them are case-specific, so I just want to highlight the big ones that I’ll be talking about in this piece.

Clear/ Clean Title

The most desirable title is a clear title. It means that there’s nothing impeding it from being sold such as outstanding debt, damages, or illegal practices. This is the only title that allows you to get a car loan (in most cases).

When a car leaves the manufacturing production line, it’s immediately given a clean title.

Salvage Title

Typically, you’ll see a salvage title on a car that just had a major accident. It is granted after a car loses 75% of its original value, which is easy to do after a big accident. This is the kind of title that a car gets after being claimed a “total loss” by the insurance company.

Other ways car can become re-branded is, “fire, water, hail, theft, or any natural disaster.”

After a car has a salvage title, there are a few paths it can go down, none of which end with a clean title.

Junk Title

The first option is to go for a junk title. This is when the car is sold to a junkyard to be disassembled, sold for parts, and scrapped. Most states won’t let you legally drive a car with a junk title. The title basically means the car is only good for junk metal, so it can’t be safely operated at all.

Rebuilt Title

The other option is to go for a rebuilt title. As you might imagine, this has to do with rebuilding the car.

The idea is that a skilled mechanic went through and fixed all things that were wrong with the car after it was totaled. The car was resurrected and now it can be legally sold and driven on the road.

The Remaining Title Types

The rest of the title types are:

• Bonded Title
• Reconstructed Title
• Affidavit Title
• Water Damage Title
• Odometer Rollback Title
• Dismantled Title

Understanding these won’t give any more insight into this guide, so I won’t go into more detail.

A Lot Less Expensive

The biggest and best part of a car with a rebuilt title is the price. They’re significantly less expensive than a car with a clean title, for obvious reasons.

You might even find cars that are listed for half of their Blue Book value, all thanks to this unique title.

There are a lot of reasons why these cars are less expensive, and that will be discussed later in the cons section.

Might Not Be as Bad as You Think

A rebuilt title doesn’t tell you the whole story. There’s a potential that the car has one simply because the stereo system was stolen out of the car. It could also be from hail damage or even a minor fender bender.

I’m trying to say that a rebuilt title might not be as bad as you think. Our automatic reaction is that the car must have been crushed by a boulder and then rebuilt, but it’s not always that dramatic.

Sure, sometimes it really is that bad, but it’s a matter of doing your homework ahead of time.

You Can Learn a Lot About its Past

By “homework”, I mean learning about the car’s past. You can get some pretty extensive information by looking at the CarFax of the car and manually looking up its VIN.

You’ll be getting the full picture when you do this. It’s one way to ensure you know what you’re walking into when you start signing paperwork.

It’s really helpful to look up the car. By learning the car’s past, you can avoid lemons and stick to cars that are inexpensive yet viable to own for a long time.

Seller Will Be More Willing to Work with You

There’s going to be some desperation on the part of the seller. A rebuilt title can be a black mark for a lot of buyers, so they’ll be a lot more accommodating for you.

This might mean things like bringing the car to you, dropping the price even more, and working around your schedule. There is no telling how many people said ‘no’ to a vehicle simply due to the title. You can use this to your advantage.

It’s Still a Perfectly Good Car (Probably)

There’s a good chance that the car is perfectly good. The process of rebuilding a car to make it worthy of a rebuilt title is a long and tedious one.

There’s no telling exactly what kind of workmanship was done without taking a closer look, but you shouldn’t be surprised if the car is in great working order.

When you get lucky in this situation, it’s like finding a name-brand jacket at Goodwill. You’re paying a fraction of the price but getting the real deal.

You Know They’re Most Likely Being Honest About the Car

There’s a thing called “title washing” which is super illegal. Basically, the owner goes through the process of removing the history of damage on the car and later getting a “clean” title for the car. The car still has the same history, but now it’s presented as a car in perfect condition. In other words, they’re just lying to all potential buyers.

The fact that this process is possible and yet the owner is still operating with the rebuilt title is an indication that they’re more honest. Admitting that the car was wrecked and rebuilt means that they’re probably not trying to trick you into the deal.

Be cautious though. It’s not a guarantee that they’re being honest, just a good clue. They could still be lying about the extent of the damage.

Use the Car for Parts

If nothing else, you can buy a rebuilt car and then use the spare parts. Whatever new parts they put in the vehicle can be grabbed and used on your project car. It’s probably going to be cheaper than the alternatives (short of picking parts from a junkyard yourself).

Why choose a rebuilt car instead of a junk car? With a rebuilt title, you know that they repaired the car and brought it back to working order. You can make sure all the parts work before dropping them into your other car.

The last thing you want is to grab a part from a junked car only to find out that it’s dead on arrival.

The Car Had to Have Gone Through an Official Inspection

Did you know that every car with a rebuilt title has to go through a state inspection before it can be sold? This is one way to try to keep everyone honest. More importantly, it’s a way to check the status of the car.

A lot of times, this means having a qualified mechanic look over the vehicle before deeming it ready to be sold.

Keep in mind, this doesn’t 100% guarantee that the car is good to go. There are a lot of unseen problems that won’t be detected in an official inspection. In addition, there’s nothing stopping the seller from tampering with the car after it gets inspected (except for a guilty conscience and moral compass, I guess).

Harder to Insure

There’s a lot of risks built into a car with a rebuilt title. As you probably know, “risk” is a four-letter word to insurance companies. When cars get riskier, insurance agents get quieter.

With a rebuilt title, there’s a good chance you won’t get any level of coverage from an insurance agency. If you do, the premiums will be incredibly high to help cover themselves.

Why? You could be buying a car with a ticking time bomb under the hood. You’ll be hard-pressed to find an insurance agent that will sign up to cover those damages.

The Title Could Be Hidden

I mentioned earlier that there’s a process of illegally washing the rebuilt title from a car. It comes up again because the seller might have done a similar thing with your car.

For instance, they might have a car with a salvage title that they illegally changed to a rebuilt title. You go into the deal assuming that all the work has been done, but in reality, the car is just scrap metal.

Every state has its own laws when it comes to classifying a car as totaled or rebuilt. Some cars don’t even require the owner to specify that the car’s been rebuilt.

The owner could easily go through one of these states, register the vehicle, clean the title, then sell it in your state.

You’ll Need a Second and Third Opinion

There’s going to be a bigger time commitment when it comes to shopping for a car with a rebuilt title. There’s no window-shopping in this scenario.

You’ll need to have a trusted mechanic take a look at the car, you’ll need to really look at it, and you might even need to get an insurance agent involved ahead of time. It’s not going to be a quick afternoon trip over to the seller. There’s too much at risk.

Your goal is to understand the extent of the damages and better understand the current state of the car. Spending this extra time upfront will help you to get the best possible vehicle for your needs.

You Probably Can’t Trade it in Later

Another caveat when it comes to a rebuilt title is what you can do with it when you’re ready for a new car. Many people prefer to trade in their car in exchange for less money owed on the new car. By doing this, you don’t have to search for a new buyer and deal with all the stresses of selling a car via a private sale.

The only problem is that you don’t get this luxury with a rebuilt title. Dealerships are a lot like insurance companies when it comes to bringing cars into their shop. They want to take as little risk as possible while maximizing how much money they make.

They understand that there are fewer buyers for rebuilt cars and that the car might sit on their lot for a while. Due to this, there’s a good chance you won’t be able to leverage your car as a trade-in for another car from their lot. You’re stuck with selling it directly to a dealership or via a private sale.

Passing Inspection Isn’t a Guarantee the Car’s Good

I mentioned this earlier, but it bears repeating: just because the car passed the inspection doesn’t mean that it’s in perfect condition.

One of the most common problems that go undetected is damage to the framework. If your car was in an accident and the frame was partially rebuilt, there’s no guaranteeing that the work was done correctly. They could have botched the welding job and the car is looking to come apart at any moment.

This is why it’s so important to bring the car to a mechanic before signing any paperwork.

Damages May Be Hidden

The bottom line is that the real damages could all be hidden. There’s no way to tell what’s really wrong with your car.

In fact, the car could have a major problem that hasn’t presented itself yet. For example, maybe a bolt got sheared and after enough driving, some part under your car simply falls off as you’re driving thanks to the vibrations. This is just one of many things that can go wrong down the line.

This is largely why insurance companies and dealerships are so scared of rebuilt cars. There’s no telling what’s really wrong with a car — even after a thorough mechanical inspection.

Might Not Get a Car Loan

Another problem with a rebuilt title comes at the very beginning: getting a loan. It simply won’t happen.

Why? Financial institutions use a series of pricing guides to ultimately find out how much they’ll give you for a car. After getting rebuilt, there’s no real way to tell what this value should be. They can only factor for things like mileage, year, make, model, major damages, and add-ons — they can’t get into the intricacies of this problem versus that problem.

If you get lucky and find someplace that will give you a loan, you’re not going to like the interest rate. I can almost guarantee that it will be way higher than if you were getting a new or used car. This is their way of covering their back a little bit and making the deal “worth it” for them.

If you’re buying the car with cash, then this won’t matter at all to you.

Resale Value for You Is Also Lower

Okay, so I mentioned that the best part of a rebuilt title is that it’s so cheap for you to buy the car. Here’s the bad news. This major cost savings also carries over to the next owner — the person you’re selling the car to.

The resale value of your vehicle is going to be way lower than the same make, model, and year of car that has a clean title.

If you plan on driving the car until it falls apart, then you can ignore this. If you plan on selling it eventually in order to get another car, then this is a bit of bad news.

In fact, the depreciation is downright unpredictable. There’s no chart that you can use to guess what the price will be in 3 to 5 years when you sell it. It’s just a matter of rolling the dice and hoping for the best.

It’s Tougher to Sell

Not only will you have to sell it for cheaper, but you’ll probably have a tough time selling the car in the future. I had a buddy who bought a car that was in a flood and had a rebuilt title, but there was no real damage to it. When he tried to sell it, it took him more than 6 months before he had to gouge the price and it finally sold to a reluctant buyer.

Everyone thinks that you’re trying to scam them. It’s one of those “too good to be true” scenarios, and people don’t want to lose their shirt on a deal.

You’ll be in the opposite situation when it comes to negotiations when you first bought the car. You’ll be the one bending over backward and doing whatever you can to make the sale.

Some Damage Simply Can’t Be Rebuilt Successfully

Some damage just can’t be rebuilt. The second you start talking about structural damage, there’s a lot of doubt. Trying to fix what used to be a perfect frame might result in unpredictable crumple zones in the future and worsened vehicle safety.

In addition, an unstable frame could mess up your ability to maintain speed and a straight line on a highway. It’s something that is nearly impossible to rebuild afterward unless you gut the car and waste a ton of money.

Other things like water damage or fire damage are just as impossible to fix. You might be able to spot the problem, but it’s not so easy to fix it. Still, the car will come away with a rebuilt title that’s ready to get sold to an unlucky buyer.

Hard to Know How Well It Was Rebuilt

Another thing to consider is the whole rebuilding process. It takes a lot of mechanical prowess, patience, expertise, and commitment to actually rebuild a car. Trust me.

If you look at a rebuilt title, you won’t see any specifics about the rebuilding process. Who did it, how did they do it, what materials did they do, and how good was their work? There are just a lot of question marks when you start picking it apart.

You can take two salvaged cars, give one to the world’s best mechanic and the other to a drunk college kid, and they can both make a car that’s technically rebuilt. On paper, the two cars are identical. However, I’d bet anything that the first car will drive a lot further than the second one.

There are also a lot of different systems at play here. Suspension, steering, and drivetrains couldn’t be more different, yet a single person can fix all three and claim the car is rebuilt. This is where my skepticism starts to kick in.

Warranty Is (Probably) Voided

If you’re looking at a new-ish car that has a rebuilt title, you can probably bet that the warranty is voided. Things like a bumper-to-bumper warranty disappear the second a car gets a rebuilt title. Why would the original auto manufacturer guarantee the work of the random person who rebuilt it?

This isn’t an issue for older cars, but it’s still an interesting fact to keep in mind.

The Title Lasts Forever

After buying a car with a rebuilt title, that title won’t ever go away. No matter how much restoration you do, you’ll be stuck with the same tag on your car.

I know some people think they can buy a rebuilt car as a fixer-upper, get it all dolled up, then sell it with a clean title. That’s not the case. The title won’t change unless more damage eventually happens to it, giving it an even worse title.

Again, you can disregard this if you’re not interested in selling the car in the future or insuring it at a good rate. These are just a few of the downsides that won’t disappear.

You’re in an As-Is Deal

Do you know those Facebook Marketplace groups that say “buyer beware, all deals as-is”? You’ll be in a very similar situation when buying a car with a rebuilt title.

There’s no way to take the car back to the lot a month later and prove that they sold you a lemon that fell apart. They don’t care. You are signing onto a deal where you pay a cheap price, and you get a mystery boxcar that could have anything wrong with it. They’ll probably also have you sign some liability papers along the way that says the dealership isn’t responsible for anything that happens once you leave their lot.

Buyers Aren’t Privy to the Specifics

There are also a lot of nuances when it comes to these non-clear titles. The sellers have to do certain things, add specific pieces to the listing, and disclose information during the sale. However, buyers aren’t really privy to the specifics.

On top of that, there are a lot of different scenarios that warrant different conditions. It’s all too much to keep track of.

A seedy dealership might navigate around these clauses and lie its way through the selling process. This is highly illegal, but if they’re dealing with a customer that doesn’t know any better, what’s going to happen?

If I were you, I’d keep my guard up the whole time. Assume that the seller is trying to scam you, and that will keep you safer during the process. Do a little homework and see how the process looks in your state to buy a car with a rebuilt title.

Conclusion

Buying a car with a rebuilt title has a whole host of pros and cons. I covered some of the major ones in this piece. I hope you have a better idea of what you’re facing now, and I hope your decision-making is a little easier.

If you want more of your car questions answered, check out my site. I also posted a list of car products that can seriously help any car owner. If you have experience with rebuilt titles, drop a comment below and let me know.