First, it’s important to understand how rebuilt car titles work. When a car gets into an accident and the cost of fixing it would outweigh the value of the car, then the insurance company will declare it a total loss. The car then receives a salvage title to replace its clean title.
Someone would still choose to fix and drive the car, though. If they have the necessary repairs done and the car can pass a state’s inspection to verify these repairs, then the state will issue a Rebuilt title for the car. This signifies that the car was totaled but was then rebuilt.
Salvage and rebuilt titles do have a negative impact on a car’s value. Cars with clean titles have the highest value, followed by cars with rebuilt titles and cars with salvage titles rank at the bottom.
The reason is that just because a car with a rebuilt or salvage title seems fine doesn’t mean it’s completely fixed. There could still be structural damage or other issues that the repairs didn’t solve. That’s the risk when you get a car with one of those titles. Cars with rebuilt titles tend to be worth more than cars with salvage titles because there is at least verification that proper repairs were done, but the same risk is still there.
The nice thing about cars with salvage and rebuilt titles is that they are available for much lower prices. In some situations, you can get a steal where the insurance company declared a car a total loss even though the damage wasn’t that severe. However, there’s no way to get one of these cars back to the value it would have with a clean title. Insurance companies will set the value of these cars much lower when you purchase insurance for them, and car value guides typically don’t provide value info on these cars.
Getting a Title Loan with a Rebuilt Car Title
When you apply for a vehicle title loan, the lender goes through this process to see how much they are able to loan for your car:
- Put its info into a car value guide.
- Look over the car to see what its condition is.
- Check what the value guide has listed for cars in that condition.
- Set the maximum loan amount based on the value listed, making sure that the loan amount doesn’t exceed the state limit.
The info used to look up a car’s value in a value guide is the following:
- Its model year
- Its manufacturer and model
- Its style
- Its current mileage
The obvious problem here is that value guides don’t provide values for cars with rebuilt and salvage titles. This makes it difficult for the lender to decide how much to loan you. If you fill out an application online and receive an estimate for a title loan, it won’t be accurate for you, because it would only apply if your car had a clean title.
This won’t prohibit you from getting a title loan, but it does throw a monkey wrench into the loan process. What the lender will likely do is go through the same process of looking up your car’s value as if it had a clean title, and then going with a portion of that value for your car with its rebuilt title. For example, if the listed value of your car with a clean title is $15,000, the lender may consider it worth $7,500.
Of course, lenders usually don’t loan the full amount and instead loan you a portion of your car’s value — about 30 to 50 percent is a common range for title loans. This means when your car has a rebuilt title, it reduces the amount you can borrow considerably.
A car with a rebuilt title can be a great vehicle that you get at a bargain, but it will have an effect on any title loans you get. Don’t let that stop you if you need money right away, because a title loan will still be the best choice for that. Just keep in mind that how much you can borrow will be less than it would if your car had a clean title. Other than that, everything else about the title loan process, including state regulations and repaying your loan, will remain the same.