Rebuilt Title vs. Salvage Title: What’s the Difference?

Quick Facts About Salvage Titles and Rebuilt Titles

• In broad terms, salvage titles are for cars that require significant repair costing more than their owners’ insurance companies say they’re worth.
• A salvage title is redesignated as a rebuilt title after the vehicle passes inspection following repair and restoration.
• Buying rebuilt cars can bring excellent value, but they aren’t for everyone because of underlying risks.

A car’s title is a legal document showing the person or entity who officially owns the vehicle. Most vehicles on the used market have a clean title, which means they have never been declared a total loss by an insurance company. You might come across cars with rebuilt titles or salvage titles that have lower price tags, but why? Read on to learn the difference between rebuilt and salvage titles.

Salvage titles are generally issued when a vehicle’s repair cost exceeds 75% of its fair market value before the damage. A car with a rebuilt title was previously totaled, but underwent substantial repairs to restore its roadworthiness. Laws surrounding rebuilt titles and salvage titles vary by state. Check with your state’s Department of Motor Vehicles (DMV) for the specific regulations where you live.

• What Is a Salvage Title?
• What Is a Rebuilt Title?
• Rebuilt vs. Salvage Title Differences
• How Do Cars Get Salvage and Rebuilt Titles?
• Will a Rebuilt Title Affect My Car’s Value?
• Can You Get Insurance With a Rebuilt or Salvage Title?
• Should You Buy a Car With a Rebuilt Title?
• Our Take

What Is a Salvage Title?

A salvage title is for a car that suffered a major collision or damage after a significant weather event. For example, tropical storms, hurricanes, and other deluges can bring heavy flooding that destroys cars. An insurance company may deem a flooded vehicle a total loss in the aftermath. However, a simple definition is not universal. States have different laws about what constitutes a salvage title. You can check your state DMV’s website for specifics.

Since automobiles with salvage titles typically aren’t roadworthy, you should only consider buying one if you’re a mechanic intending to rebuild the vehicle to pass a state inspection. Even then, consider the value proposition of rebuilding a car with a salvage title compared to buying a used car with a clean title. The cost of the repairs, potentially higher insurance rates, and lower resale value might be more than the car or the effort is worth.

RELATED: Should You Buy a Car That Has Been in an Accident?

Salvage Title Variations

This article overviews “salvage” and “rebuilt” car title brands. You must check with your state’s DMV for specifics because some states have varying regulations, vehicle age factors, and terminology.

For example, a totaled car in California may receive a salvage certificate, not a salvage title. If your salvage vehicle is rebuilt and restored to roadworthiness, you must register it again as a Revived Salvage Vehicle.

Another outlier is South Carolina law, which has multiple title brand definitions, including Salvage Flood and Salvage Fire.

What Is a Rebuilt Title?

Cars that previously had salvage titles receive rebuilt titles after the holders repair them to roadworthy condition. Although the official title status is “rebuilt,” it does not necessarily mean that a mechanic rebuilt the car from the chassis up. For a vehicle to go from salvage to rebuilt in nearly every state, it must be inspected and certified by a state-authorized inspector and deemed fully functional and safe to drive.

A rebuilt title has considerable advantages over a salvage title. When you buy a used car with a rebuilt title, it’s officially ready to register, insure, and drive. That typically isn’t the case with a salvage title. It’s crucial to do an in-person inspection of the car before buying a vehicle, especially one with a rebuilt title.

Pro Tip: When buying a used car, we always recommend obtaining a vehicle history report from professionals like AutoCheck and having your own inspection performed. A professional inspection is never more critical than when considering the purchase of a car with a rebuilt title.

RELATED: Should You Buy a Car That Has Been in an Accident?

The Difference Between a Rebuilt and Salvage Title

Salvage titles are for vehicles that require significant repairs to make them legally drivable and insurable. After refurbishing and passing a state inspection, a once-salvage car can receive a rebuilt title. So, salvage title versus rebuilt title? A car with a salvage title needs substantial work, while vehicles with rebuilt titles have made the journey from salvage to drivable.

What Does Rebuilt Title Mean?

Although an insurance company deemed a car with a salvage title a total loss, the vehicle was rebuilt to roadworthy standards, as certified by a state inspection. At this point, the owner may apply for a rebuilt title.

What Does Salvage Title Mean?

A car with a salvage title has been declared a total loss by an insurance company and can’t be insured or legally driven on public roads. An owner can apply to change the vehicle status from salvage to rebuilt only after significant repairs and certification as roadworthy by a state inspector.

How Do Cars Get Salvage and Rebuilt Titles?

A car gets a salvage title when an insurer determines the vehicle is a total loss. Insurers have different thresholds for what “totaled” means. These standards rely on the magnitude of the damage and the components involved. In any event, a salvage title renders a car ineligible for license plates and driving on public roads.

When a car with a salvage title becomes roadworthy after necessary repairs, it can get a rebuilt title upon passing a state inspection. With a rebuilt title, you can register the car and put plates on it, making it street-legal again.

Is a Salvage Title Bad?

Cars with salvage titles have been in severe accidents or suffered major weather/natural events such as hurricanes, fires, or regional flooding. They usually can’t be driven on public roads. Only consider buying a used car with a salvage title if you intend to rebuild it to a roadworthy condition. That means you either are a competent mechanic or have very deep pockets (or both) to accomplish the required repairs. The benefit is a significant discount compared to a used car with a clean title. However, there are other headwinds to owning a car with a rebuilt title. Read on.

RELATED: Should You Buy Back Your Totaled Car?

Is a Rebuilt Title Bad?

It boils down to what you mean by bad. Cars with rebuilt titles have been severely damaged in an accident or some other mishap and restored to a state that qualifies for a rebuilt title. Although these vehicles must almost always pass muster for a state inspector, it doesn’t always mean they are in totally safe working order. An inspector can only pass judgment on what can be seen or tested. Issues may still lurk in places that can’t be inspected or tested. In other words, the state inspection might not reveal every lingering problem.

Will a Rebuilt Title Affect My Car’s Value?

Yes, a car with a rebuilt title will always be worth less than the same model with a clean title. A vehicle with a clean title has never been in an accident severe enough to be deemed a total loss by an insurance company. Even when repaired to the highest standard, a car with a rebuilt title will always have a nasty accident in its past, bringing down its cash value. Almost any damage requiring repairs will at least somewhat diminish a car’s resale value.

If you’re trying to sell a car with a rebuilt title, we regret to inform you that you’ll get less money than if it had a clean title. Potential buyers will likely have questions about the vehicle’s condition. Your transparency will bring better odds of attracting the right buyer and getting a relatively reasonable sale price.

Pro Tip: Although it varies, the value loss from a rebuilt title typically runs between 20% to 40%.

MORE: Used Car Buying Guide

Can You Get Insurance With a Rebuilt or Salvage Title?

Manage your expectations when attempting to insure a vehicle with a salvage or rebuilt title.

• Salvage title: In this case, your expectation should be zero. Insuring a car with a salvage title is like insuring someone deceased. In the eyes of the state, a car with a salvage title is dead. In most instances, the best outcome is that it winds up in a lot next to a garage, having its carcass picked clean for spare parts.
• Rebuilt title: Your expectations for insuring a car with a rebuilt title can rise. However, insurers may reduce offerings to liability coverage and other state-required insurance. It is also likely to be more expensive. You shouldn’t expect comprehensive or collision coverage; therefore, whether you are at fault or not, you’ll pay for repairs to your car.

Pro Tip: Do not buy a car with a rebuilt title without researching the availability and cost of insurance.

Should You Buy a Car With a Rebuilt Title?

• It depends. Not all cars with rebuilt titles are created equal. If you’re considering buying a car with a rebuilt title, obtain a vehicle history report and ask the seller plenty of questions about the car’s past and the repair process.
• Look for a transparent seller. If the seller can answer your questions satisfactorily, has a good knowledge of the car’s past, and can provide photos of the car after the accident and before the repairs, then it could be worth buying. If the seller is dodgy, walk away.
• Know the risks involved. Even when a seller is open and honest, dealing with a rebuilt title can be risky. There could still be an underlying issue caused by the accident that went unnoticed. If you’re unwilling to take that risk, paying more for a similar car with a clean title is worth the extra money.
• Obtain a professional inspection. When considering a car with a rebuilt title, it always helps to be mechanically inclined so you know what to look for when checking it over in person. If you don’t know much about cars, consider a pre-purchase inspection before agreeing to buy any automobile, especially a vehicle with a salvage or rebuilt title.

MORE: Top Questions You Should Ask a Private Seller

Pros of Buying a Car With a Rebuilt Title

There is but one reason to buy a car with a rebuilt title:

• A car with a rebuilt title will almost always cost less than the same model with a clean title. 

Cons of Buying a Car With a Rebuilt Title

Rebuilt cars often have enticing prices, but they might not be quite the bargain they seem.

• Some damage might not be immediately evident. For example, corrosion from floodwaters can cause problems with the electrical system months after the visible water damage is repaired.
• Selling or trading your vehicle with a rebuilt title can be difficult. Dealers won’t give you top-dollar as a trade-in because the car will likely go to auction instead of a spot on the dealership lot. A private sale is possible, but many buyers avoid rebuilt titles.
• Your insurance company will probably deny comprehensive coverage and provide only liability insurance for cars with rebuilt titles.
• You will likely have a difficult time securing financing.
• Whatever might have remained of the manufacturer’s warranty is voided.

Our Take

We aren’t big fans of buying a car with a rebuilt title. Granted, it can be a more affordable path for acquiring a new ride, but there are probably some negatives attached: limitations and cost of insurance, lower resale values, and issues with financing. Moreover, damage that is never properly repaired or addressed can surface at any time. If you are taking that route, research, obtain a vehicle history report, and get a professional inspection.

Editor’s Note: This article has been updated since its initial publication.