When you purchase a vehicle, you're probably expecting to receive a title — and rightfully so. The title contains information such as vehicle identification number, make and year as well as license plate number and gross vehicle weight, among other information. But, did you know there are different titles you can receive depending on the vehicle? Usually, you will receive a clean title at the purchase of a new car. However, if you're buying a used car, you could also receive a salvaged or a rebuilt title depending on the car's history, so it's best to do your homework to ensure you drive away happy, and don't get stuck with a lemon.
What Is a Salvage Title?
If a vehicle is involved in an accident or is otherwise damaged beyond its worth, the insurance company will declare the vehicle a total loss. This means that it can no longer be driven in its damaged state. Further, the damage doesn't have to be caused by a collision for the car to be considered a total loss. For example, severe water or mold damage from a flood or body damage from a hailstorm or fire can cause a car to be written off as a total loss. When a car is totaled, in most states you cannot legally drive it, even if it is operable.
Safety is a major concern as well. Because the damage could have been caused by an accident, it may not have a sturdy frame or other issues that could render the vehicle unsafe to drive. Generally, these vehicles are scrapped or sold to a salvage company, and used for spare parts. You will not be able to register a vehicle with a salvage title, and in many cases, you won't be able to obtain auto insurance for it. Yet sometimes, someone will purchase the car from a salvage yard in order to repair it, so that it can once again be driven, registered and insured.
Rebuilt Title or Rebuilt Car?
During your search for a car, you may see the term "rebuilt title" used to describe a vehicle you're considering purchasing. A rebuilt title is a simply the term used for a car that was previously salvaged — with a salvage title — but has since been repaired. This previously salvage-titled car can then be registered and driven. Insurance could still be difficult to come by, but a rebuilt title can be registered and driven legally.
To protect consumers from fraud, some localities bar individuals from purchasing vehicles with salvage titles; only repair shops and car dealerships are allowed to purchase and repair salvage titles for resale. After the car is repaired, the owner or dealership must have the car inspected by a state or local official and show proof and receipts of the completed repair. After this is done, you will receive your rebuilt title. Now you can sell the car as you wish; however, cars with rebuilt titles sell for less than those with clean titles.