Considering Buying a Salvage-Rebuilt Title Vehicle? Here’s What You Need to Know

Introduction

After hours of searching online, you finally see the car you like. It looks like the price matches your budget, and looking at the history report, you found some data like prior damage, “salvage” or “rebuilt” history, and now you have some questions. With so much different data coming from all over the place and a lack of proper knowledge, I am confident a lot of people assume it is some type of fraud and skip to the next vehicle. However, I would not rush so fast. I will try to share my personal experience on why it makes sense to consider a “rebuilt” title, especially when your budget is a crucial factor.

My Background

Having been in the car industry since 2005, starting as a new car salesperson at a local dealership, I still find myself wondering about certain things on history reports. It is not surprising that an average person who buys a car once every three to five years might feel overwhelmed by the information. While AI technology helps find answers faster and easier, some information requires experience and knowledge that cannot be easily shared, especially with so many differing opinions.

Of course, as a person who has spent half of his life dealing with vehicles, for me, it comes to a simple decision when I am purchasing the vehicle: it all comes down to how much money I want to spend and how much car I can get. In simpler terms, how much value will I get for my money? However, I do understand it is not an easy case for the average consumer because we must consider the fear factor caused by the uncertainty of the vehicle’s history and current condition and so much different information floating around. Generally, there are a few types of consumers that are buying vehicles: people that buy brand new cars with a warranty, people who are buying used cars but with a “clean” history only, and people who are willing to purchase cars that had some history of damage because that offers extra savings. Regardless of the case, all consumers share one common goal: to make sure they get maximum value for the price.

If you ask AI what a “rebuilt” title is, you will get something like this: “A rebuilt title is issued to a vehicle that was previously declared a total loss and given a “salvage” title due to significant damage from an accident, flood, fire, or other events. After the vehicle has been repaired and passed an inspection to ensure it meets safety and operational standards, it can be issued a “rebuilt” title. While a car with a “rebuilt” title can be a more affordable choice, it is important to be cautious. These vehicles may have underlying issues that could affect their reliability and safety. Additionally, insurance companies might offer limited coverage for “rebuilt” title vehicles.”

Dealing with “rebuilt” titles myself for almost 20 years, I can certainly say: AI knows what it is talking
about.

Key Considerations

I will be talking about cars that have a history of accidents, salvage history, and eventually turned into a “rebuilt/salvage” title. Now, some of you may ask yourself: should I go for the vehicle that has been previously wrecked and has a “rebuilt” title or not? There is no right or wrong answer because many factors will affect the decision. However, if you do consider going with a “rebuilt” title or any vehicle with past accident history in general, here is some information I would like to share that I have learned in many years of rebuilding cars and driving “rebuilt” title cars myself for over 17 years. Truthfully, it is hard for me to imagine ever going to buy a “clean” title vehicle simply because I see so much potential in savings. So, I will try to explain why sometimes “rebuilt” title cars are a wise and smart choice to go with and why sometimes it is better to stay away from them. I found three common statements I keep hearing about why some people avoid purchasing previously wrecked cars, especially with a “rebuilt” title.

1. It is impossible to insure it or finance it. Or insurance costs more.
2. Afraid that there is still something wrong with the vehicle.
3. It is not worth anything, has no resale value.

I will try to give my personal view on all these statements based on 17+ years of observation and the actual sale of “rebuilt” title cars. I am not sure how many cars I have sold in my life, but it is over one thousand, and about 80% of them were “rebuilt” titles. During that time, I have made plenty of mistakes, which helped me gain valuable and necessary knowledge. Let us imagine you finally find a car, body style you like, and it fits your budget. Everything looks good, the mileage is great, the price is below average, and there you go, the history shows it has been wrecked and has a salvage history that turned into a “salvage/rebuilt” title. Primarily, a crucial factor is to consider that any “rebuilt” title car will have a lower average resale value on the market than any other “clean” title vehicle. How much lower is up to everyone's debate.

I have heard all kinds of different opinions that sometimes do not make any sense whatsoever. However, after selling thousands of “rebuilt” title vehicles, my general rule is they are about 25 to 30% cheaper than any “clean” title car, and this number can vary depending on the overall cost, quality of the repair, market demand, and availability. Interestingly, I have noticed as the car gets older, this percentage between “rebuilt” title and “clean” title cars gets smaller since lower budget cars are more affordable, have less financial risk, and they are in high demand and the main decision factor shifts from history to overall mechanical condition, mileage, and reliability.

Regardless of everyone's opinion, in the state of Florida, if you total your car that has a “salvage/rebuilt” title, insurance usually pays you around 80% of its retail value. We recommend checking with the insurance carrier about their policies, as they can vary, and this is a crucial factor to consider in case you need to replace your vehicle after it gets totaled again. Please stay mindful if you total your vehicle that car insurance agents get their retail value by comparing prices of similar “clean” title cars around your area. We found that some of them might have “lemon” history or some other history red flags that lower the overall market sale price for such vehicles. Using that as an average number to evaluate the market cost, the consumer is risking getting double hit on the final value of your totaled vehicle.

We recommend making sure to always check that with the agent and dispute if needed, and always demand comparisons to cars that do not have any red flags in history. I have seen such practices regardless of what type of title vehicle you own. I found after the first phone call, an insurance agent will correct the payout value, and this will potentially save you thousands of dollars.

Also, I have heard sometimes people think “rebuilt” title vehicles are not insurable or cost more. After doing actual research and talking to people to understand where they would get such information, I concluded that in rare cases, some insurance agents mistakenly quote “rebuilt” title vehicles as “salvage” titles, which causes premiums to go up. This is easy to overcome by talking to a senior agent or supervisor and correcting the quote. I have seen a few cases where insurance agencies ask for an actual visual inspection of the vehicle to make sure it is roadworthy.

I also have seen a few cases where customers would not be able to get an insurance policy due to numerous accidents in their history, and they were forced to switch to much less known insurance with high premiums that do not insure “rebuilt” titles. However, those are rare cases. I can certainly say, in the last 10 years, there was a huge shift towards ease insuring “rebuilt” titles as insurance agencies update their policies to adjust to current realities. Most major insurance companies insure “rebuilt” titles without any problems and offer full coverage.

Financing

There is not much to discuss here, except, some banks finance “rebuilt” title vehicles and have certain policies like additional interest rates or limits on loan-to-value ratio (LTV), and some do not finance at all.

All you must do is just call the bank and ask. If you need help finding a bank that finances “rebuilt” titles, just reach out to us at www.igocar.store.

The next important question I would try to answer is: what exactly happened to the vehicle? Was it a theft recovery, hail damage, accident, fire, or flood? Regardless of the reason, if insurance does not see any economic benefit to restoring it and it falls into the local law criteria to be totaled, insurance will write it off. These criteria vary from state to state.

At IGOCAR INC, we DO NOT buy “flood” vehicles, as we see too many potential problems that can arise in the future. Due to limited experience with such vehicles, we do not have an expert opinion on them; therefore, we will not discuss such vehicles. If the vehicle has been wrecked, you can request images of the accident.

Most images of the accident can be found by entering VIN in a web search. You may request other documentation, such as what type of parts have been used: OEM factory new or used, aftermarket, or some parts may be repaired. Regardless of the situation, what some consumers do is take the previously wrecked vehicle to a local mechanic shop. Now, imagine you have a skin problem and instead of a dermatologist, you see a cardiologist. Ask yourself, is it a wise thing to do? The answer is obvious. Similarly, with cars, most
low-mileage cars will have great mechanical condition since the wear and tear are still minimal.

However, due to previous damage, we want to make sure the repair has been done correctly, and the vehicle is safe to drive. This is not a simple matter to answer; it requires experience and, in most cases, some type of certification to be truly knowledgeable to provide the best answer possible. In fact, even the collision technicians themselves have different visions and ways to approach the same type of damage. But the last thing you want to do is listen to your mechanic about whether it is a good car to buy or not. Mechanics should only provide a mechanical condition report; everything else is beyond their ability level. Most common things that are usually neglected include weld quality, corrosion protection, factory specs and measurements, paint match and proper steps for painting application, and safety equipment.

Choosing a collision shop should be like choosing a mechanic shop: make sure it feels trustworthy and do your own research. Shops that have certified technicians will be more knowledgeable than shops that do not invest in education. Have them look the repair over and provide as much information as possible. There is a reason we pay less for a “rebuilt” title car; such cars are not required to be restored to manufacturer-recommended specifications, so it is up to the shop to decide how thorough they want to be with the repair. Regardless of how the shop wants to proceed, one particularly crucial factor to consider is that improper repair can cause the insurance company to decline a future repair claim if the same area must be repaired once again. If you ever encounter such a case, please contact IGOCAR INC so we can help you find a quick solution. The last thing you want to do, regardless of the title, is to drive a vehicle that has a poor repair job that potentially can lead to bigger expenses.

To me personally, safety is the most crucial factor to consider during any repair, and there should be absolutely no shortcuts in such matters. If the vehicle had airbag deployment, have the collision shop double-check all the safety items, especially things like clock spring wires behind the driver steering wheel airbag. If there is a sign of repair, have the seller replace it with a completely new clock spring. The most widespread practice for rebuilders is to send out seatbelts for repair to lower the cost. I am not going to judge the quality of such repairs, but due to my inability to control repairs of such a vital safety mechanism, at IGOCAR, I have decided to replace all seat belts with an OEM non-refurbished item. If seat belts were locked during the accident, unless you are ok with someone refurbishing the seatbelt prior, have the seller show an invoice that the seat belt was replaced by quality used or new part.

One of the interesting observations I have made is that some consumers had previously owned a “rebuilt” title vehicle in the past, and even though most of them are satisfied and keep purchasing “rebuilt” titles cars repeatedly, a few had a negative experience and now they are telling everyone that a “rebuilt” title vehicle needs to be avoided at all costs. However, in fact, they simply did not do due diligence and research before buying the vehicle and purchased the car from a place that has very limited collision repair experience, prefers shortcuts, and practices unsafe repairs.

Additionally, used car dealers are trained to find any way possible to lowball your vehicle value during the trade-in process, and by having a “rebuilt” title, do not be surprised to hear things like “your vehicle is not worth anything.” There are two reasons why they would say something like this: first, they absolutely have no experience or clue what they are talking about; it takes years of experience dealing with such type of cars.

Second, they are trying to find any reason to get your vehicle at the lowest cost possible to gain additional profit during the trade-in sale. You are always welcome to bring your trade to us for another evaluation. Unfortunately, all these types of situations create a negative reputation for wrecked vehicles overall and steer people away from objectivity.

Financial Sense

If we put all fears aside and assume the vehicle has a decent quality repair, the next question I would have in mind is: does it make financial sense to purchase a “rebuilt” title vehicle? My answer is yes if certain criteria are met:

1. The initial cost of a “rebuilt” title vehicle is at least 20% less, or in most cases, the percentage
is higher.
2. Higher quality repair means fewer hidden issues and expenses in the long run. Having
reputable dealer with certified collision technicians pre-purchase inspection done can
significantly help.

If you have a certain budget, which means you will be driving a much nicer vehicle with fewer miles, this fact alone is important to most consumers. If the budget is flexible and you are chasing a specific vehicle, then here are some facts to consider: Let us imagine you have paid $20,000 for the vehicle with a “rebuilt” title, and another person paid $28,000 for a similar car with a “clean” title. This alone is an additional $480 in sales tax in Florida.

Now, most people will argue about value for resale. In my experience, in 3-4 years, a $20k “rebuilt” title vehicle will sell for around $14k, while a $28k “clean” title vehicle will sell for around $17-$18k. Do the math: the “rebuilt” title cost of ownership is $6k vs. the “clean” title cost of ownership, which is more than $10k plus the additional $480 for sales tax. Also, if you finance the whole amount, which means you are paying interest on a higher amount, which is also an additional cost out of pocket. I also found selling “rebuilt” title vehicles around $14k, assuming it is still in great shape because it was taken care of and built correctly, is a lot faster process than selling a vehicle around $18k where lots of cars are for sale in a similar price range. However, some banks might charge an extra 1% or 2% of interest for “rebuilt” titles, but to me, the cost difference is not so significant.

Conclusion

No matter where you buy your vehicle from, it is good practice to have your vehicle checked by a professional. We recommend taking high-mileage cars to a trusted mechanic shop and cars with low mileage and a history of accidents to a trusted collision shop. The cost of such a service may be anywhere between $100-$200. It is a small amount that can significantly help make a better decision. Or you can bring your potential vehicle to us. At IGOCAR INC, we offer a pre-purchase inspection, which I personally designed and can confidently say is the most thorough inspection you will ever find in the area.

Written by Igor Afanasjev 12/16/2024.