When you purchase a vehicle from a car dealership, especially if it is a new or certified used vehicle, you can expect to get a clean title to the vehicle shortly afterward (if purchasing with cash) or when you have made all of your payments (if financed). ).
A clean title means that the vehicle has never been seriously damaged by accident, vandalism, or weather conditions. This tells a potential buyer that he is getting a vehicle with a clean history.
When a vehicle does not have a proper title due to a series of issues, a trademarked title is issued. Two of the most common types of trademark titles are a “rescue” title and a “restoration” title. Here, we review the differences between the two.
Please note that some states may have slightly different definitions of each, but the following information will apply to the vast majority of regions in the United States.
Related: What is a brand? (Comparison of 6 types)
What is a salvage title?
When their vehicle is involved in a serious accident, one of the first things the vehicle owner will do is contact their insurance company to file a claim.
If the repair costs exceed a certain percentage (usually between 50% and 90%) of the vehicle’s value, the insurance company will likely pay the policyholder the fair market value of the vehicle and then take possession of it. Structural or chassis damage is a common reason a car or truck is considered “salvage.”
Since the repair costs are greater than the value of the vehicle, it is cheaper for them to pay the market value and sell the vehicle at auction. When this happens, the state Department of Motor Vehicles (DMV) will change the vehicle’s title status to “salvage.”
By law, you cannot drive a car with a salvage title. Insurance companies usually sell them at a public auction, where people buy them as spare parts. If the buyer is a professional mechanic, he or she may be able to repair the vehicle to get it running again.
See also: What is a hydrolysis engine?
What is the reconstructed title?
When a titled salvage vehicle is rebuilt or repaired so that it can be used again, the title status may change from salvage to “rebuilt.” Salvage title status can only be changed after a state-certified automobile inspector has examined the vehicle and determined that it is roadworthy.
Some independent mechanics make a living by purchasing salvaged vehicles at auction, repairing (rebuilding) them, and then reselling them for a profit. It’s like flipping houses.
If you are thinking about doing this, be aware of the risk involved. When you buy cars at auction (you usually have to be licensed to do so), you often don’t know how bad they are until you take possession of them.