If you've been in the market for a used car, you've probably stumbled across the term "rebuilt title."

How does a car with a rebuilt title differ from any other? Basically, it means the car had previously been damaged to the point where it was no longer worth repairing.

Insurance companies generally consider a car "totaled" if it is 50 to 80 percent damaged. That’s when it is issued a salvage title. Once the car is fixed, it's given a rebuilt title.

Like anything, there are both pros and cons to buying a vehicle with a rebuilt title. We break down what you need to know below.

Buying a Rebuilt Car Will Save You Money—Maybe

When you buy your rebuilt auto, you'll spend much less than if you bought a new or used vehicle. But just because your initial payment is low, that doesn't mean the car will be less expensive overall.

If you don't have the car inspected, you could end up with a car that needs major repairs.

Your Car Passed an Initial Inspection

Some people might be wary of buying a car that was once salvaged. But in order to get a rebuilt title, a car has to usually pass a state inspection. And if the car is safe and runs well, buying a car with a rebuilt title can save you hundreds.

Exactly how much can you save? Fifty percent, according to Jason Shackelford, owner of Stingray Auto Repair in Seattle and Redmond. Of course, this depends on the popularity of the vehicle, the damage done to it, and how well it was repaired.

Still, Always Get a Second Opinion

These cars likely have to pass an inspection before receiving a rebuilt title. But have your own mechanic take a look before buying it. Consumers often are dazzled by a rebuilt car’s exterior, not realizing the car is still in need of major repairs.

"Always have the car inspected by a shop with experience handling vehicles with rebuilt titles before purchasing," Shackelford says. “A shop without the proper experience may not know what to look for.”

Remember, all cars with rebuilt titles were once extremely damaged and inoperable. Make sure the mechanic looks closely at everything before signing off on the car. Someone could always repair it and then remove any new parts they added after receiving the rebuilt title.

Buying a car with a rebuilt title? It's not necessarily a bad thing. But insuring them can be tricky.
Rebuilt Title Insurance

Always Ask for Documentation

When your car is repaired, there should be documented evidence of the work done to get it running again. If the person selling you the car refuses to give you the paperwork, run! Anyone trying to sell a reputable rebuilt vehicle won’t mind providing documentation.

"Ask for receipts from the repairs and ensure the repairs were done by a reputable facility, not in Uncle Joe’s back yard," Shackelford says.

Another way to get your auto's history is through the Department of Motor Vehicles (DMV) or through AutoCheck.

It's important to know how your car became salvaged, and the extent of its repairs. This is essential not only to know whether or not to buy the car, but for future maintenance of the vehicle.

For instance, the car could have been rebuilt with older parts from other totaled vehicles. While it may still run properly, because it was fixed with spare pieces you will need to carefully maintain it.

You May Have Trouble Selling Your Car

Owners of cars with rebuilt titles need to maintain them carefully. Because these types of vehicles are more problematic, they're often difficult to resell. If you do end up selling it, chances are you won't make much of a profit.

Check if Your Insurance Company Will Insure Cars with Rebuilt Titles

Some car insurance companies won't insure a car with a rebuilt title. Or, if they do provide insurance, they may not be willing to offer full coverage. This is because it is usually more difficult to figure out the real value of a car that was rebuilt. As discussed, it's easy to miss damage that happened when the car was first totaled.

Since every state except New Hampshire requires drivers to have liability insurance, this can make your new ride unusable.

"The biggest challenge of owning a car with a rebuilt title is insurance can sometimes be difficult to obtain. And the resale process can be more tedious, as most car dealerships won't take a rebuilt vehicle as a trade in," says Shackelford.

If your insurer refuses to cover your car because it has a rebuilt title, there are still options. Shop around and compare quotes to find an insurance carrier that will cover vehicles with rebuilt titles.

Ask These Questions Before Buying a Rebuilt Vehicle

  • How was the car damaged?
  • How extensive were the damages?
  • What repairs were made to the car and who repaired the vehicle?
  • Is the frame properly aligned?
  • Has a certified mechanic examined the car?
  • Will my insurance company offer coverage for cars with rebuilt titles?

Check for These Signs the Car is a Lemon

Besides asking plenty of questions when you're shopping for a vehicle, there are other signs your dream car is a dud.

"It is all too common for repairs not to be made properly,” Shackelford says. “It is a good idea to look for panel fitment. The lines or gaps between the body panels are a sure sign of a good or bad repair. Also, the paint color from panel to panel should be an exact match, not off by a shade or two."

Consumer Reports warns that if you see these signs on a car with a rebuilt title, think twice before you buy it:

  • Large dents or crunched fuel lines underneath the car
  • An air-bag light that doesn't work properly (this could be a sign it wasn't replaced correctly)
  • Uneven tire tread
  • Hood, trunk, or doors that won't close correctly

"Certain types of damage to a vehicle should never be fixed, such as floods and fire damage," Shackelford says. "But more minor things, such as vandalism or suspension damage, [are] easily repaired."

Signs of Flood Damage Include:

  • Silt, leaves, and sand in trunk
  • Mud or silt in the glove department
  • Wet carpets
  • Musty odor
  • Air freshener or other scent used to cover up smell of mold

"Buying a car with a rebuilt title [can go] great or turns into a nightmare. There really is no middle ground, so buyer beware," says Shackelford.