Since a vehicle title signifies ownership, it’s an essential part of the sales transaction. The title gets transferred to the new owner so they can register the car and prove it’s theirs¹. Not only does this document provide the owner’s name and a unique vehicle identification number (VIN), but it also provides some insight into the car’s condition.

In most cases, cars have what’s known as a clean title, meaning the vehicle hasn’t been in a major accident or been impacted by a natural disaster like a flood or hail storm. If there are special conditions associated with the vehicle or its ownership, it may have a rebuilt title². This designation has meaning for used car dealers and their customers.

As a dealer, you might consider buying a vehicle with a branded/salvage title with the intent of re-selling it to a consumer. Once the car is repaired, it needs a rebuilt title. Before you start acquiring cars with a salvage title with the intent to convert them to a rebuilt title, it’s important to understand what a rebuilt car title is and the pros and cons of cars with this status.

What Does “Rebuilt Title” Mean?

Before getting into rebuilt titles, it’s important to understand salvage titles. A salvage title is issued typically if the vehicle owner’s insurance company has determined that it is officially totaled after a collision or a natural disaster. This can mean it’s inoperable or unsafe to drive or that the cost to repair the vehicle far outweighs its value³. It could be a combination of these factors as well. In short, a salvage title is a clear signal that there are historical issues with a vehicle⁴.

A rebuilt title is issued once the car has been significantly repaired and deemed safe and operable. Laws on rebuilt titles vary by location, so there may be different inspection and operability standards that need to be met before issuing the rebuilt title.

It’s important to note that rebuilt titles are permanent. Once a car has been designated as rebuilt, it will no longer be able to have a clean title. 

The Pros & Cons of Rebuilt Titles

There are benefits and risks associated with purchasing a vehicle with a rebuilt title. Rebuilt vehicles are typically sold at a lower cost because they have had issues and don’t have original parts. Additionally, the reason the car was totaled in the first place can vary. In the simplest and most ideal cases, the vehicle required parts that outweighed its current value, but the damage wasn’t severe enough to make the car unsafe³. The car also didn’t have long-term issues, such as significant rusting from flooding.

Conversely, there could be issues that allow the car to run in the short term but cause problems over time, significantly increasing the owner’s repair costs. When purchasing a vehicle with a rebuilt title, use databases that track the car’s history to fully understand what types of accidents and environmental damage it has sustained. With ACV vehicle condition reports, dealers can access the Basic CARFAX report or sync to their CARFAX subscription to get even more details on the vehicle history.

Insuring a car with a rebuilt title also comes with challenges. There may be limitations in the types of coverage a company is willing to offer for a rebuilt title, and they may charge a higher rate.

Lastly, vehicles with rebuilt titles are less desirable on the market, making them more difficult to offload if needed. Even though they’re less expensive to buy, they can have limited resale potential⁴.

The key thing to remember when considering a vehicle with a rebuilt title is that you need to fully understand the vehicle’s history. Check the available documentation for repair and maintenance reports and a vehicle accident history. 

ACV Gives You Insight Into the Car’s Condition and Vehicle Title 

As a dealer, you want to know whether the vehicle has a rebuilt, salvage, or clean title. Thankfully, ACV’s vehicle condition reports outline what type of title the vehicle has, so you can know upfront what you are purchasing. These industry-leading condition reports give you a full understanding of the vehicle’s condition before buying. 

ACV Auctions is the go-to marketplace for acquiring reliable vehicles at attractive prices and getting support at every step. Join our auction platform today to learn more about our transparent reporting and start bidding on new inventory.

Sources:

1. What is a Car Title? Progressive.com. Retrieved on February 24, 2023, from https://www.progressive.com/answers/what-is-car-title/
2. Valdes, R.  (30 September 2022). What is a Rebuilt Title? Autotrader. Retrieved on February 24, 2023, from https://www.autotrader.com/car-shopping/buying-used-car-whats-rebuilt-title-236599
3. Martins, A. (23 July 2022). Rebuilt Car Title: What it is, Pros and Cons as a Consumer. Investopedia. Retrieved on February 24, 2023, from https://www.investopedia.com/is-it-worth-buying-a-car-with-a-rebuilt-title-5179621
4. Hawley, D. (21 December 2020) What Is A Rebuilt Car Title? J.D. Power. Retrieved on February 24, 2023, from https://www.jdpower.com/cars/shopping-guides/what-is-a-rebuilt-car-title