How Branded Titles can Affect Poor Credit Car Loansby Steve Cypher on Sunday, December 9th, 2012
Just because practically all high risk auto lenders refuse to finance a used cars with branded titles doesn’t mean a few credit challenged car buyers don’t find themselves making payments on one every year.
At Auto Credit Express we have seen this happen because for the past two decades we’ve been helping car buyers with low credit scores find dealers that can arrange for approved auto loans.
During this time we’ve also heard from consumers that have gone through the experience of buying a vehicle with hidden damage. Unfortunately, the results can be expensive –from electrical system problems to engine and transmission failures. It’s even more of a problem for individuals with bad credit that find themselves on limited budgets.
So how can you avoid this situation?
Used car titles
Here’s how it works: if any vehicle is involved in an accident or other event that results in severe enough damage to declare it a total loss, once repaired that vehicle is issued what is known as a “branded title.”
As a rule, most poor credit lenders will not finance cars with these types of titles because they pose too much of a maintenance and accident risk for buyers. The types of branded titles can vary by state but usually include the following:
• Salvage – A vehicle with damage that would typically cost between 75% and 100% of its value to be repaired. In some states, there is no rebuilt brand and salvage vehicles that have been repaired still carry a salvage brand.
• Rebuilt – A vehicle previously branded as “salvage” that has been repaired and inspected. These vehicles might be drivable, but this title means that it was, at one point, a salvage vehicle.
• Flood Damaged – A vehicle that has been water damaged. In some states a flood damaged vehicle might also carry either the salvage or rebuilt brand.
• Junk – a vehicle that can only be sold for scrap or used for parts
• Fleet – This is not specifically a brand, although most states do require any vehicle that has been used as a taxi, a daily rental or for police use be designated as a fleet vehicle.
• Mileage unknown – Also usually not considered a brand, although most states require that a vehicle’s title be notated if its mileage is unknown due to odometer replacement or other issues.
• Stolen – These vehicles often don’t have their own a brand, although many states may refuse to title a recovered stolen vehicle. Due to the damage they can sustain, many of these vehicles receive other types of brands so they cannot be re-sold.
The actual color of branded titles can either be the same or different from those of clean titles. Either way, branded titles will have a notation at the top or the bottom that sets them apart from regular titles.
Avoiding branded used cars
Your best chance to avoid buying a previously damaged vehicle is to first run its VIN number through the national database, then request a vehicle history report. If it passes both these tests and you’re seriously considering buying it, you should have it thoroughly inspected by both a certified master mechanic and a body and frame specialist before you sign the loan papers.
As we see it
It’s important that you avoid financing a vehicle with hidden damage, especially if your FICO scores are low and your budget is stretched.
One other thing we want you to know: if you’ve been turned down for a conventional car loan, we want you to know that Auto Credit Express specializes in matching applicants with auto credit issues to dealers that can offer them their best chance at securing auto loan approvals
So if you’re ready to begin that process, you can begin now by filling out our online auto loans application.