If you have bad credit and find a vehicle that has a rebuilt or salvage title, you should know that subprime lenders – lenders that deal with bad credit – probably aren’t going to finance it. Any car you want to buy with an auto loan typically needs to have a clean title. Salvage and rebuilt titles are considered branded titles, and the vehicle you choose to finance can’t have either.
Why Most Lenders Don’t Finance Branded Title Cars
In order to finance a car with a bad credit auto loan, the vehicle you choose usually must have a clean title. If a branded title is attached to it, you can’t finance it in most cases. This is because subprime lenders don’t want you to drive an unreliable car, and want to ensure it doesn’t break the bank due to unforeseen repairs.
Salvage and rebuilt are just two of many types of branded titles, but they’re the most common. Salvage titles are issued when a car has extensive damage from an accident or natural disaster. Rebuilt titles – sometimes called repaired or reconstructed – are vehicles that were once listed as “salvage” that have been repaired enough to be in operation.
Other Branded Titles to Watch Out For
Each state has different title brands and variations, so it can be confusing to know what each means. Depending on where you live, you may come across all, or some, of these four other common title brands:
- Flood – Vehicles that experienced damage from a flood.
- Junk – Also called crushed or scrap, the junk title brand means the car can only be sold for parts and scrap.
- Lemon – Lemon laws are different in each state. However, for a new vehicle to be listed as a lemon, it needs to have spent at least 30 days out of commission, or typically have had the same issue repaired multiple times without it being fixed.
- Fleet – Technically not a title brand, fleet cars are common at auctions. Fleet vehicles either have high mileage, have been driven by multiple drivers, or both. These cars are usually previous rental, police, or government vehicles.
Risks of Buying a Car with a Salvage Title
One of the biggest risks of buying a salvage title vehicle is the unknown. You truly don’t know the extent of the damage that was done. In order for a vehicle to have a salvage title, an insurance company has to declare it a total loss. Depending on the state, the car’s repairs would need to cost 50 to 90 percent of its pre-crash value.
Along with the amount of damage being a mystery, there are four other risks to consider:
- Safety – People who rebuild salvage cars sometimes cut corners to save money by installing faulty or inexpensive parts and equipment.
- Fraud – People who sell salvage title cars can withhold or lie about the damage done to the vehicle.
- Insuring/financing difficulties – Sometimes, it can be hard to get proper coverage on salvage title cars. Insurance companies are scared off because of the difficulty involved in assigning accurate vehicle values.
- No resale value – Most dealerships won’t accept salvage vehicles as trade-ins, and they typically can’t be valued accurately with online pricing guides.
A salvage title car can be a viable option if you know the ins and outs of the specific vehicle – especially if you know the seller and have a detailed history of the car. You may also benefit from a salvage car if you have the mechanical knowledge to repair any future issues. Regardless of your choice, salvage vehicles come with the potential to cause more risks than rewards.
Beware of Title Washing
When you’re vehicle shopping, you may find used models that seem to run well and have a clean title, but it’s also possible they went through title washing. Title washing happens when a car with a branded title is taken to a state with lower title requirements and is issued a new un-branded title.
This is illegal and isn’t always easy to spot on the surface. However, you can avoid purchasing a vehicle that’s been through title washing by having a certified mechanic thoroughly inspect it before you buy. They can look deeper into a car for potential issues.
Auto Credit Express Tip: Besides having a certified mechanic perform a pre-purchase inspection, it’s important you view its vehicle history report as well. If anything doesn’t match up, you have further confirmation that the car brand is fake and should look elsewhere.
The Bottom Line
It’s important that you check, and double-check, for a branded title. Even if it’s listed as “clean,” unfortunately, there are unscrupulous private sellers and dealerships out there that try and title wash.
When you’re ready to get a bad credit auto loan, Auto Credit Express is here to assist. We work with special finance dealers all across the country that have the special finance lenders needed to get a bad credit car loan.
Simply fill out our easy, fast, and free auto loan request form, and we'll work to match you with a local dealership that can help!