A reconstructed title vs salvage title does make a good comparison, as both are different title brands. One is better than the other. However, you probably don’t want your car to have any of these title brands, as they can affect its sales value and insurance.
Before we delve into the differences, understand that a reconstructed title is the same as a rebuilt title. Most states refer to it as “Rebuilt” while states such as Pennsylvania and New Mexico frequently call it a “Reconstructed” title.
What Does Reconstructed Title Mean?
When an insurance company declares a car a total loss, it is first given a salvage title. However, after the car has been repaired, it must be thoroughly checked for safety by the state where it is being repaired.
If it meets the rebuilt standards of the specific state, it is issued a reconstructed or rebuilt title. At this point, the vehicle is now roadworthy and operable on public roads.
In some states, you can only rebuild a car with a licensed rebuilder. Georgia and Illinois require you to complete the rebuild process using a licensed rebuilder.
Now, let’s find out how a salvage title is different.
What is a Salvage Title on a Car?
Still on the comparison of “reconstructed title vs salvage title”, let’s look at what a salvage title means.
Insurance companies consider a car a total loss, and then report it to the DMV, where it is issued a “salvage title”. The total loss declaration is due to repairs after an accident costing more than the car’s value before the accident. They simply consider it uneconomical to repair the vehicle because an insurance company cares more about numbers.
A car can be issued a salvage title due to:
- Severe car accident (the most common reason)
- A defective car bought back by the manufacturer
- Recovered stolen car after insurance payout
- A car with a tampered odometer
- Damage from floods, fires, or hail
Basically, when an insurance company totals a car and it is issued a salvage title, it means that such a car cannot be used on public roads until it has been repaired to state standards and issued a reconstructed salvage title.
Why should you worry about salvage titles? Well, it’s because driving a car with a salvage title is against the law. Think of salvage titles as a warning label. They’re there to protect you from buying a car that might not be safe to drive or even legal.
Reconstructed Title Vs Salvage Title – Major Difference
The major difference between a reconstructed and a salvage title is that a car with a reconstructed/rebuilt title is roadworthy, while a salvage title car is not. So, while you are legally allowed to drive a reconstructed vehicle on public roads, you can’t do the same with a salvage title car.
Rebuilt cars are salvage cars that have been repaired, tested for safety, and certified for use again on public roads.
So, if you are in the market for a used car, it’s not legal to drive a car with a salvage title. Make sure you have considered the pros and cons of a reconstructed car and those of a salvage car before you hit the market.
What Are the Pros of Reconstructed Title?
There are advantages to having a reconstructed title on a car, especially when it comes to the price.
- Cost. You can buy it for 20–40% less than the regular price of that same make and model.
- Condition. Not every rebuilt car was in a big crash. Some might have only minor cosmetic issues, like hail damage. So, what’s under the hood can still be in good shape and a smart purchase.
- Donor Car. Rebuilt cars can be a great source of spare parts for your current vehicle.
If thinking about buying a rebuilt car, you can do a few things to make sure it’s the right choice for you, such as:
- Have a chat with the seller and make sure they know a lot about the car, are honest about its history, and are willing to answer your questions.
- It’s even better if they can show you pictures from before and after the repairs.
- If you can, have a professional check the car before you buy it. The inspection might not find everything, but it will give you useful information about the vehicle.
- Even if you gather a lot of information, buying a reconstructed car still has risks. If you’re not okay with those risks, it might be safer to buy a car with a clean title.
- If you feel like something’s not right, it’s okay to walk away.
Be sure you know all the extra costs that come with buying a rebuilt car, like fixing it up, getting insurance, storing it (if you’re using it for parts), and other expenses. This way, you can make a smart decision.
What Are the Cons of Reconstructed Title?
Along with the positives, there are some downsides. Here are reasons why you might want to avoid a reconstructed title car:
- Safety. Can you really be sure the car is as safe as it used to be? Especially if it had water damage, problems might show up months later.
- Fraud. Is the owner telling the whole truth about how much damage the car had? If the car doesn’t work right, other than going to court (which can be tough to prove), you might lose money and a working vehicle.
- Insurance. It could be tough to get insurance.
- Resale. Dealerships usually don’t want them, and selling privately can be tricky too.
These considerations also apply to a salvage title car. And, yes, you can sell a salvage title car but you will experience lowballing from potential buyers.
A salvage title car shares the same pros and cons as a reconstructed car, except that you cannot legally drive it on public roads. Since it is not operable, you can expect a huge drop in value since it needs to follow the inspection process to be declared roadworthy again.
How Does a Reconstructed Title Affect Insurance?
Generally, insurance companies prefer the lowest risks possible, so it’s not easy to get insurance for a reconstructed car. Let’s see how rebuilt titles impact your car insurance:
- Some insurers won’t cover rebuilt cars.
- Some only provide liability insurance.
- Usually, you do not get full coverage such as comprehensive or collision.
- Insuring a rebuilt car can be expensive.
Getting insurance for your reconstructed or rebuilt car might be tricky, but it’s possible. However, expect higher insurance costs, but if you have a good deal on the car, it can balance out. If you drive safely, you can save on insurance, no matter the car’s title.
You might need to prove your car is roadworthy by submitting inspection results, photos, and repair receipts before getting insurance. If possible, get insurance quotes before buying the car to know what to expect. Always be honest about the car’s title to get accurate quotes. Misleading the insurance company can lead to denied claims and losing coverage.
Remember, insurance won’t cover a car with a salvage title since they’re not allowed on public roads.
How Do You Find Out the Salvage Value of Your Car?
If you can’t picture your driveway without your wrecked car or want to find out how much your insurance will pay you (the salvage value), here’s what you should understand:
You can keep your car, but you won’t get the settlement money. If you want to fix up your cherished vehicle, make sure to look at your state’s rules about rebuilt titles to make sure it’s worth it.
- Take the retail value and the wholesale value, add them together, and then divide by 2. This gives you the fair market value (FMV).
- Your insurance company usually pays around 75% of this FMV.
- To get your salvage value, subtract 1 from the FMV as a decimal (0.75), which equals 0.25.
- Finally, multiply the market value (for example, $10,000) by 0.25 to get your salvage value, which is $2,500.
If you plan to repair a car with a salvage title and make it safe for the road, make sure it’s worth the money and effort. Restoring a salvage title vehicle can be a lot of work, depending on its history.
To understand these car title brands better, here is a breakdown of the major brands:
- Clean title. It is a car that has never been declared a total loss. However, some clean title cars have been in accidents or stolen at some point.
- Salvage title. This is for cars that insurance companies have considered a total loss after an accident or theft.
- Reconstructed or rebuilt title. These are previously salvaged cars that have been repaired and are now safe to drive. However, they carry a title with a “Rebuilt” or “Reconstructed” brand.
Ultimately, the type of title a car has determines if it’s safe and legal to drive. It also affects the resale value. A reconstructed title can make a car worth 20–40% less than the same one with a clean title. This explains why some people try to change a reconstructed title to a clean one. A salvage title, on the other hand, means the car cannot be driven on public roads.