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Have you ever considered buying a car with a rebuilt title? Before you do, understand what the term means, what you should look for, and how it may affect your financing options.
What is a Rebuilt Title?
A rebuilt title is different from a salvaged title, so let’s start there first. Cars involved in an accident that causes the insurance company to ‘total it,’ receive a salvaged title. This means the insurance company paid off the owner and now owns the vehicle in its damaged state. The insurance company now wants to offload the car by selling it and making some of the money back.
A rebuilt title refers to a once salvaged car that was as you probably guessed, is rebuilt. This doesn’t mean that Johnny went and worked on the side and fixed up a car and now the state gives it a rebuilt title, though. A professional mechanic and/or body shop must repair the car and the authority issuing the title must inspect the vehicle before providing the rebuilt title. If the authority issuing the title agrees the car is in good condition now, the title will be reissued as rebuilt.
Steps to Take Before Buying a Car With a Rebuilt Title
It may sound like a great deal to buy a car with a rebuilt title, especially if a quality mechanic did the work, but you should take a few important steps first.
- Get paperwork for the repairs – Don’t rely on the word of anyone trying to sell you a car with a rebuilt title. Ask for proof of repairs. Receipts or work orders will do, but something that gives you a paper trail of the work done and information to contact the person that did the repairs to ask your own questions.
- Know what happened to the car – You should also know why the car has a rebuilt title. What type of damage did the car experience? Was the frame affected? How long did the car sit in a salvaged state before repairing it?
- Get the car inspected yourself – Hire a licensed mechanic to look at the car, don’t rely on your test driving prowess to determine the car’s condition. You may think the car runs great and is worth the money, but a mechanic that puts the car on a lift may have other thoughts.
- Get a body shop expert to look at it – Depending on the type of accident the car was in, the body damage may have been extensive. A body shop expert can look at the car and tell you the quality of the repairs completed. Remember, you may want to sell the car at some point in the future too, so you want a car that will do well in resale.
- Call your insurance agent – You may find that your insurance company won’t insure a car with a rebuilt title because they can’t properly value it. Even if your insurance company will insure it, they may not offer full coverage, which is something you should know upfront.
Financing a Car With a Rebuilt Title
You may not have much luck heading to your local bank for financing on a car with a rebuilt title, but there are other options.
Start with any lenders you’ve dealt with in the past. Do you have a good relationship with them? In other words, did you make your payments on time? If so, consider asking for a lending opportunity with them. If not, there are many subprime lenders advertising loans for cars with a rebuilt title.
As is the case with any financing, make sure you read the fine print. If you have good credit but need a specialty lender to get the loan on the rebuilt car, negotiate the rate and terms of the loan. The riskiness of a rebuilt title typically means that you’ll pay a higher than average interest rate, but bringing less risky factors to the table, such as good credit and a down payment, can help you get a better deal on the financing.
Reasons Not to Buy a Car with a Rebuilt Title
Even the best-looking cars with a rebuilt title may not be the right choice. Read below to learn the reasons you may not want to buy a car with a rebuilt title:
- Flooded cars – Cars damaged by a flood often have issues for many years, many of which go unnoticed until later down the road. Even a licensed and expert mechanic may not see the impending damage that the flood caused, leaving you with a lemon down the road.
- Safety issues – Make sure that you know beyond a reasonable doubt that a car is safe. Know the details of the accident and the repairs first. Next, have an expert investigate it. If there are any signs of cutting corners on repairs when it comes to safety, run the other way.
- Fraudulent activity – Make sure that you only buy a car with a rebuilt title from a reputable seller. If you aren’t sure if you can trust the legitimacy of what they are saying, look elsewhere. You need to know beyond a reasonable doubt that the level of damage they claim occurred is the truth and that they aren’t hiding any important facts that could affect the car’s safety, reliability, and value.
Buying a car with a rebuilt title may save you money now, but it could be more costly down the road. Take the necessary steps to ensure that any rebuilt car you buy is legitimate, repaired properly, and doesn’t have any long-term damage that may show up down the road.Get the right insurance coverage.