Do you want to buy a used car? Then you may come across cars that have rebuilt titles. This can be on a dealer’s lot or it can also be for private sale. A rebuilt title can be given to a car when it is repaired, when it used to have a salvage title. This car is now considered capable of being driven and thus you can buy it.
Also Read: How To Get a Loaner Car From Dealership
So what is so special about these cars? Basically, rebuilt cars are a lot cheaper. So, it is profitable to buy them over cars with clean titles. But they also carry some risks. This is why it can be a little harder to get a loan for these than other used cars. You should know some things before applying for a loan for a rebuilt title car.
Why are rebuilt titles given?
Your car title proves that you are really the owner. Brand-new cars will have clean titles. Then if it has an accident and gets damaged, then it cannot be driven. Then it can get a salvage title. This means that your car is no longer safe to drive. It cannot be registered.
But a salvage title does not mean that the car ends there. It can be rebuilt and driven again by someone else. Damaged cars with salvage titles can be repaired and then be given rebuilt titles. Then the cars have to pass an inspection. If it is decided they are safe to drive, it can then be bought again.
You can buy rebuilt cars and then register them to your name. You may see both salvage and rebuilt titles written as “branded” titles. This means that there is something different about the car.
Buying rebuilt title cars
So why is buying a rebuilt title car good for you? There is a price advantage. They may be 20% to 40% less costly than clean title cars. But you will also have to look at the added risk. The troubles that have plagued the car can mean it will need more and more repairs in the future. Then you will have to deal with extra costs anyway.
So, there is some work to do before you go for a rebuilt title car. Find out why it was given a salvage title in the first place. If the car was totally flooded, then it may have more issues in the future. You may also have to deal with fried wires or mold.
It is a good idea to have a trusted mechanic and body specialist inspect the car properly. Then you can decide to buy it.
How to get a loan for a rebuilt title car?
You may face some challenges in looking for a loan for a rebuilt title car. Lenders may be a little reluctant at first. So, what are the reasons?
The main reason is the high risk. Lenders are always looking for to manage the risks related to lending. A rebuilt car is more likely to break down at some point. So, it will lose value in the future. If the car is very costly but cannot run, then you may default on the loan. Then the lender will need to take the vehicle and sell it to avoid loss. If the car is not running, they can sell it to make up for their loss.
You can try a few things that can help you get a loan for a rebuilt car. It is always a good idea to get and present the statement of a mechanic. This person is the one who has checked the car. That person has to declare that the car is safe and in good condition to drive. You will also have to bring a statement from your insurance carrier. This will indicate that they are willing to insure the car you want to buy. If you have good credit, this may help even further. This is because it decreases the risk for the lender.
Important facts to know about rebuilt title car loans
If you want to buy a rebuilt title car, you can follow the steps we have mentioned to go about the loan application. But you have to remember that in spite of all the precautions you take, financing such cars are a little complex. So, you have to understand some factors that come with financing a rebuilt title car –
Finding a lender who is willing to give you a loan for a rebuilt title car can be a little problematic. So, you have to be patient and persistent with your offers. Make sure that you can produce all the documents needed and that you have carefully checked the car’s condition.
Lenders can charge higher interest on loans for rebuilt title cars than they do for clean title cars. So you have to be prepared for that as well since there is high risk involved with financing a rebuilt title car.
Always remember that your rebuilt title car may undergo many issues of damage in the future. As they can get damaged and malfunction easily, they will lose value in the future. So, even you may not be able to sell such cars for a good price if you need the money. If the car is worth less than you have owed on it, you can go upside down on the car loan. This can lead to a tremendous loss on your side.
The Bottom Line
Buying rebuilt title cars can be less costly than brand-new cars. But they also involve some risk. Depending on the history of the car, it may or may not get into issues of malfunction in future. But if you are able to find a car you like, then let it get checked. If a good mechanic says it is in running condition, you can go for it. Then you may be able to find a lender to give you a loan for the car.
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