Difference Between Salvage and Rebuilt Title (With Table)

Car title types

A car’s title is a legal document that establishes who the owner of the car is. If your auto lender has a lien on your car, it might hold onto the title until you pay off a car loan in full, or the title could be transferred to you by a seller if you buy a car outright in cash. A car’s title can tell you important facts about the vehicle.

Clean title

A clean title doesn’t have any records indicating that a vehicle is or has been unsafe to drive in the past. Keep in mind that a clean title doesn’t mean you won’t have any mechanical problems with the vehicle you’re considering, but it’s an assurance that the car hasn’t been totaled or suffered significant damage.

Other types of titles

There are many different types of titles that can mean different things, and the definitions can vary by state. For example, in California, a junk title indicates the vehicle has been dismantled by an individual or dismantler. In Michigan, if the title is marked as junk or scrap, it means that the vehicle can’t be titled again.

It may be difficult to know how to tell whether a car has been issued a title brand or junk title in the past. The Federal Trade Commission recommends getting an independent review of a vehicle’s history and using trusted sources to check whether there is anything funky with the car’s past. For example, the Department of Justice’s National Motor Vehicle Title Information System provides information about a vehicle’s title and certain damage history for a fee.

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How does a car get a salvage or rebuilt title?

If a vehicle incurs extensive damage with repairs totaling between 70%-90% of the car’s value, then the insurance company may deem the car as a total loss. Once that determination has been made, a state motor vehicle agency changes the car’s title from clean to either salvage or junk. After being presented with a salvage title, you cannot drive, sell or register the vehicle until it has been repaired.

At this point, the salvage vehicle is typically sold by the insurer to a third party interested in repairing the vehicle or breaking it down for parts. If the vehicle is repaired, it will need to pass safety requirements before being given a rebuilt title by the state’s motor vehicle agency. By giving the repaired vehicle a rebuilt title, this provides the buyer more information about its history.

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What is Salvage Title? 

When a car has been deemed unrepairable and not safe for driving anymore, the salvage title is assigned to it. This type of car is not usually purchasable. However, scraps and other parts of the vehicle may be sold, depending on their condition.  

The title is usually designated when a vehicle’s repair cost outweighs its market value when the vehicle is considered totalled. The insurance company will determine whether it is more cost-effective to pay for repairs or fully compensate the driver to replace their car.  

Cars receiving salvage titles are either damaged in an accident, stolen, or deemed a total loss by their insurance company. The insurance company is usually the one that decides whether the vehicle is a total loss or not. Therefore, it is not safe to drive at all. States generally have different laws about what constitutes a salvage title. 

What is a Rebuilt Title?

When a salvage titled vehicle has been rebuilt or

When a salvage titled vehicle has been rebuilt or repaired to be drivable again, the status of the title can change from salvage to “rebuilt.” The status of a salvage title can only be changed after a certified state auto inspector looks over the vehicle and deems it drivable for the road.

Some self-employed mechanics make a living from buying salvaged vehicles at auctions, repairing (rebuilding) them, and then reselling them for profit. It’s similar to flipping houses.

If you plan to do this, just be careful of the risk involved. When you purchase cars at an auction (you usually need to be licensed to do so), you often don’t really know how bad a shape they are in until you take possession of them.

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Major Differences Between Salvage and Rebuilt Title

  1. When a car has been deemed unrepairable and not safe for driving anymore, the salvage title is assigned to it. On the other hand, Cars with salvage titles can receive rebuilt titles if they have been restored. 
  2. Salvage titled cars is not usually purchasable, whereas rebuilt titled cars can be purchasable depending on their conditions. 
  3. Salvage titled cars is not safe for driving, whereas rebuilt titled cars can be safe for driving depending on the situation of the car. 
  4. Salvage titles are given to vehicles that have been in major accidents and have been deemed a total loss by their insurers. On the other hand, Rebuilt titles are assigned to cars formerly with salvage titles but reconstructed to a roadworthy state. 
  5. Salvage-titled cars’ scraps and other parts can be sold depending on their condition. On the other hand, Rebuilt-titled vehicles can be sold at a lower price. 

When a salvage vehicle is repaired

A salvage vehicle can be repaired and even driven legally. However, it must be repaired and receive a rebuilt title. Once the vehicle has been repaired, it must be inspected by an authorized state person. It will then be registered with a rebuilt title. For the vehicle to be registered, the repair company or person must show receipts for the repairs.

Rebuilt cars can also be insured by some providers and even financed for purchase. They will have a greater resale value than a salvage car.

One of the confusing aspects of rebuilt titles is they have different names. For example, they may say “restored” or “reconstructed.” In some states, the vehicle may even receive a clear title with the word “salvage” included. A reason for confusion about such titles is the use of the word “clear” versus “clean” because the two aren’t the same thing, even though they may be used interchangeably.

Salvage vehicles can become roadworthy if they are rebuilt. When you decide to purchase a pre-owned vehicle, make sure you know if you are getting a clean title or a salvage title or one for a vehicle that has been repaired from salvage condition.

Getting insurance with a salvage or rebuilt title

Salvage title insurance may be hard to find since the vehicle, in many cases, isn’t safe to drive. However, rebuilt title insurance is easier to obtain, but certain stipulations will still apply.

Even after the necessary repairs are made, some insurers may only offer liability coverage. Many insurance carriers will not extend full coverage for salvage rebuilt vehicle because it is challenging to assess all of the pre-existing damage the vehicle has incurred. Collision and comprehensive coverage, which are both optional on standard auto policies, are unlikely to be offered with this type of title.

Since a rebuilt title signifies that the vehicle is no longer in its pristine, undamaged state, its value is much lower. Furthermore, because there may be undisclosed or unseen damage in a rebuilt vehicle, insurance companies will also view this type of title as being more likely to pose a risk on the road.

After you have found an insurance company to insure a car with a rebuilt title, you may be able to take more steps to receive more coverage. To prove that a vehicle with a rebuilt title is insurable, you may be able to provide more information to your insurer. This includes a statement from a professional mechanic indicating that your vehicle is in good working condition, pictures that show the its present condition and repair receipts, which is a given when you purchase a vehicle with a rebuilt title.

Questions to Ask When Considering a Car With a Rebuilt Title

There are advantages to buying a car with a rebuilThere are plenty of things you’ll want to keep in mind when considering a car with a rebuilt title. The first question you should ask is, What kind of damage was done to the car? This should be available from the DMV inspection, or you can always gain access to the vehicle history report to find out.

There are advantages to buying a car with a rebuilt title. Typically, the repair work will be carefully documented. You should receive the same paperwork that was required to get the rebuilt title, and all work should be explained to you. If this is the case, you’re getting plenty of information about the car, which can actually be more than the average used car.

What is a clean title?

A clean title is one you would receive in most cases when you purchase a vehicle. A brand new vehicle has a clean title and most pre-owned vehicles that can be driven safely and are insurable. Insurance companies will insure a vehicle with a clean title for the amount of its value. You can also take it to the DMV to register your vehicle and receive new plates.

Salvaged Title

When a car is involved in an accident or is otherwise severely damaged and the cost of estimated repairs exceeds the value of the car itself, the insurance company will likely determine the car to be a total loss. At this point, the vehicle is given a “salvage” title, which means the vehicle is not road-worthy and will not be able to be legally registered to drive in most states. Generally, the only situation in which you’d want to purchase a vehicle with a salvage title is if you’re buying it for parts or if you own an auto body shop that can rebuild the vehicle so that it is safe to drive.