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When you’re looking for a new or used car, one of the biggest decisions you’ll have to make is how much of a car you can afford.
And since the cost of cars keeps rising, some people consider buying cars with rebuilt titles.
But is this a smart financial decision to make?
Sure you can save money, but what are the consequences of this?
In this post, I’ll walk you through the pros and cons of buying a car with a rebuilt title.
In the end, you will be able to decide of going this route to save money on your next vehicle is worth it or not.
Table of Contents
11 Critical Pros And Cons Of Buying A Car With A Rebuilt Title
Rebuilt Title vs. Salvage Title
Before getting into the advantages and drawbacks of a rebuilt car, I need to make sure you understand the difference between a rebuilt car and a salvage car.
Many people throw around both terms and interchange them, but they are very different.
A salvage car is a vehicle that was in an accident with structural damage or was damaged in a way that costs a significant amount of money to repair.
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For example, flood damage, a hail storm, riots, or even a stolen car could be given salvage titles.
The insurance company that insured the vehicle decided to list it as totaled as the cost to repair it would not be worth it to the insurance company.
Understand that to the insurance agency, a total loss could mean the cost to repair it is 70% to 90% of the resale price.
Salvage title cars cannot registered, driven, or sold in its current state.
A car with a rebuilt title means the car has been repaired and has passed state inspection.
The car is ready for resale and a buyer can purchase the vehicle, get insurance coverage, and legally operate the vehicle.
Now that you know the difference between rebuilt cars and salvage vehicles, let’s look at the pros and cons of rebuilt cars.
5 Pros Of Buying A Car With A Rebuilt Title
There are many advantages of buying rebuilt title cars.
Here are the ones worth knowing.
#1. Offers A Lower Purchase Price
A car with a rebuilt title is going to have a much lower purchase price than another car of the same make and features.
Because of this, you could save a lot of money on the price of the car.
This is a huge benefit if you don’t have a lot of money to spend on a car or want to buy something cheap just to get around town.
It could also make sense to buy for your teenager seeing as how if they unfortunately would get into an accident, it wouldn’t cost you a lot of money since the car isn’t as valuable.
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#2. Could Get A Great Deal
As mentioned earlier, just because a car was totaled and given a salvage title doesn’t mean the car is going to have a lot of issues.
In the case of a hail storm for example, only the exterior of the car would need fixing.
The engine, transmission, and other major parts that can be costly to fix should still be in perfect working condition.
Remember, there are numerous reasons why a car is listed as a total loss and given rebuilt status.
It could simply be an older car and it wasn’t worth it to pay for the repairs.
This is why it is important to review the vehicle’s history so you can see how severe the damage was and this can help you decide if buying a rebuilt title car makes sense for you.
#3. Ability To See Issues Through
While it can be scary buying a rebuilt car, know that it needs to pass inspection and be road worthy.
As a result, a mechanic can’t do a few things here and there and skip other repairs.
They need to get the car to the point of being able to be driven and insured.
Now, can issues still present themselves and you end up with a lemon?
Of course, but don’t think this can’t happen with any other vehicle on the used car market.
As an added benefit, you can see the damage the car has sustained from the DMV or car reports and then review the list of repairs to make sure every issue was addressed.
This will at least put your mind somewhat at ease when making the final decision of buying or not.
#4. Is Able To Be Driven
Taking the above point one step further, in order to go from salvage title to rebuilt title, the car needs to be road worthy.
To get it to this point requires a lot of labor and repairs.
As a result, you can be sure the car is able to be driven without any issues.
This can give you some peace of mind that other used cars on the market may not provide.
However, getting a used car with a clean title and low mileage could also provide this same benefit.
It really comes down to what you are willing to spend and how much risk you want to take on.
#5. Could Part Out For Money
Depending on the vehicle, you could buy a car with a rebuilt title and instead of using it as your main car, you could part it out.
Many cars are more valuable when sold in pieces rather than the entire car itself.
The downside to this is you have to disassemble the vehicle yourself, so you need some working knowledge of cars.
Also, it will take a lot of time not only to part out but also sell.
6 Cons Of Cars With A Rebuilt Title
As great as the benefits of a rebuilt title car are, there are important drawbacks you need to take into account.
Here are the biggest ones to know.
#1. Not All Insurance Companies Offer Coverage
One major drawback of not having a clean title is you might not be able to get the car insured.
While most vehicles will be insurable, you might find you need to find another carrier to insure your car.
Or, you might need to pay a higher car insurance rate than other vehicles with a clean title.
This increase in operating costs could wipe out any savings you get from a lower purchase price.
So if you are thinking of buying a rebuilt title car, call your insurance agent first and make sure you understand the costs.
#2. Could Have Ongoing Maintenance Issues
No matter how skilled a mechanic is, there is always the chance of a car with a rebuilt title having some issues.
When you have to completely rebuild a car, you never know when something funky might happen.
Maybe a wire somewhere is rubbing against something else causing a short every once in a while.
The odds of a mechanic finding this and the bills from all the attempted repairs could set you back hundreds or even thousands of dollars.
You could have a handful of mechanics look over the vehicle before you buy it and it wouldn’t matter as these issues could appear at any time.
#3. Need To Buy From Trusted Source
Because a rebuilt vehicle was in a major accident or had significant damage done to it, you need to put in the extra work of making sure it was repaired correctly.
While the car might look great on the outside, you don’t know the quality of the restoration work or the skills of the person who repaired it.
Because of this, it makes sense to review the car’s history with a company like CarFax.
You could also look into the vehicle’s history through your state’s motor vehicles department, but using CarFax or similar service is easier.
Just know these reports don’t catch everything.
There could still be hidden damage that isn’t reported.
As a result, you need to take the vehicle to a trusted mechanic that can give you a second opinion by looking it over for you.
A better idea might be to take it to a mechanic that specializes in the make of car you are looking to buy as they are more familiar with it.
You might even want to invest the time of having a couple mechanics look it over, simply for peace of mind.
#4. No Warranty Offered
When you purchase a new car, you get a generous warranty on it, protecting you from anything going wrong.
Many used cars also offer a warranty, sometimes a long one in the case of a certified pre-owned car, or a shorter one for a regular used car.
But with rebuilt cars, there typically isn’t any warranty.
This is because there is a lot of things that can go wrong with the vehicle and the person selling it doesn’t want to risk having to make additional repairs.
This goes back to buying from a trusted source.
If the person is honest and knows their workmanship, they should offer some kind of warranty.
When I was in college, I bought a rebuilt car.
The person selling it was a small business that specialized in Honda’s and their mechanic worked on these cars for over 30 years.
They knew the quality of their work, and offered a 180 day or 5,000 mile warranty on the vehicles.
In fact, the only vehicles they sold were cars with rebuilt titles.
I bought the car and it worked without issue.
I even would take the car to them to be services or for repairs because they would source used spare parts to keep the prices down.
Had they not been in business for so long or offered a warranty, I probably wouldn’t have bought from them.
#5. May Not Be Able To Trade In
Something not many potential buyers think of is the trade in or resale value of the vehicle when it comes time to get rid of it.
Because it has a rebuilt title and not a clean title, your trade in offer could be significantly less.
The reason for this is because the dealer selling the car will have to sell it for less because of the car’s title.
If you think you are going to drive the vehicle until the wheels fall off, this might not be a concern to you.
But if you plan on this car being a short term option until you have the cash for a clean title car, you might want to think twice.
#6. Might Not Get Financing
Finally, if you need to get a car loan in order to buy the vehicle, you might find it harder to secure the loan.
Some financing companies might not want to extend a loan to you in the first place because of the risk of the vehicle having a rebuilt title.
Or if you get financing, you might get a lot less because the value of the car is less or you might face a much higher interest rate on your loan.
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As a result, make sure you secure financing before you decide to buy so there aren’t any surprises when it comes time to complete the purchase.
There are the pros and cons of buying a car with a rebuilt title you need to know.
When shopping for your next car, don’t assume a car with a title of rebuilt status is something to avoid.
You can consider this vehicle if you can trust the person who is selling it and it is being sold for the right price.
You just have to do a little more work, but this extra work can save you thousands of dollars in the long run.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.