When buying a used car, the title itself is crucial. Not only is it essential for a legal sale, but it can also tell you a lot about the auto. What is a branded title? And should you buy a car with one?
A branded title means that the car had extensive damage or defects or was declared a total loss. Since then, it has been rebuilt or repaired and is now safe to buy. Getting a car with a branded title can easily save you 20 percent to 40 percent, but it also comes with an added risk.
Learn more about how a car may end up with a branded title, as well as what else you should know about this and other types of titles before buying a used car.
Your Guide To Branded Titles
Buying a car with a branded title can be incredibly tempting, especially considering the discount that typically comes with them. But the fact that the auto is priced well below similar options is not a fluke – it is because of the auto’s history.
If an auto has a branded title, then it has sustained some serious damage or previously had some major defects. However, these issues have since been corrected, and the vehicle is now deemed safe to drive.
Take a closer look at branded titles and other types of titles to get a better idea of whether buying a car with this type of title makes sense for you.
Types Of Branded Titles
There are a variety of reasons that a car may end up with a branded title. Remember that branded titles will remain even if the auto is now in perfect condition. Every state handles branded titles differently, but the following are the most common types.
Altered Odometer Titles
Some unscrupulous people will change the odometer reading of a car to increase its asking price. But this is easier said than done, as odometer readings are regularly recorded at registration and during service. If illegal changes to the odometer are discovered, the car will have a title that says “odometer rollback” or “altered odometer.”
Rebuilt Title Brand
In the case of a rebuilt title, the car was previously in an accident, and the insurance company declared it a total loss. When this happens, most insurance companies sell the autos at auction. Some buyers buy totaled cars for parts while others repair them.
If a totaled car is repaired or rebuilt, it must pass a safety inspection before it can get a branded title. That branded title will then include the terms “reconstructed” or “rebuilt.” Take this as a warning that the vehicle’s structural integrity may have seen better days.
Salvage Brand
As the name implies, a salvage brand title indicates that the auto was a salvage car. Like a rebuilt title, this vehicle was in an accident, and the insurer declared it a total loss. As a total loss, the combination of the scrap value of the auto and the cost of repairs was more than a percent of the auto’s value. Importantly, the salvaged car has not been restored or repaired up to safety standards. That is the main difference between a salvage brand and a rebuilt title.
Water Damage Brand
Water can cause extensive damage to an auto, affecting the engine and interior. It can lead to the growth of mold and mildew. Depending on the extent of the water damage, it may receive a branded title that indicates “water damage.”
Should I Buy A Car With A Rebuilt Title?
One of the most common questions is whether you should buy a car with a rebuilt or branded title. You will have to weigh the pros and the cons yourself to decide. Know that there are both positives and negatives.
Pro: More Affordable
The most obvious benefit of buying a car with a branded title is that it will be much more affordable than other similar vehicles. You can expect to pay 20 percent to 40 percent less than the value you see listed in the Kelley Blue Book. This makes them ideal for people on a budget. It also means that you may be able to get a newer auto or one with more features while sticking to your budget.
Con: Financing And Insurance Can Be Challenging
Because of the auto’s history, it may be hard to get financing or even insurance for it. Maybe you will have to look harder to find coverage, or perhaps your rates will be worse.
Con: Harder To Resell
Although it won’t be impossible to resell your auto with a branded title, it can be harder. That is because you will have to find a buyer who is willing to buy an auto with a branded title. And remember that you will have to charge significantly less than a comparable auto with a clean title.
Con: Risk Of Hidden Problems
The most obvious risk of buying a branded title car is that there may still be hidden issues with its performance. Compared to the average used car, a car with a branded title has a higher risk of expensive repairs in the near future. However, you can mitigate this risk with a thorough inspection.
Con: Every State Is Different
The rules for branded titles vary greatly between states. This means that an auto may not have to be repaired to the same standards in some states as others. In other words, not all branded autos will be equal.
So, Should You Go Ahead With The Purchase?
Many experts suggest skipping branded titles when you can and instead opting for a clean title. But if you are on a budget or you’re willing to take the risk, then go for it. Just be aware that you may find yourself with very expensive repairs in the near future, potentially costing you more in the long run. On the other hand, you may end up with an amazing deal. You have to decide whether it is worth the risk.
If you do decide to buy a car with a branded title, always do so cautiously. Know that you are taking a risk and do everything you can to reduce that risk. To start, find a mechanic that you trust and have them thoroughly inspect the auto. Never skip this step with a branded title; your test drive is not enough.
Clean Title Meaning
A clean title simply means that the auto was never a total loss or had serious issues that would have led to a branded title.
It Can Still Have Problems
Remember that a clean title is not a guarantee that the auto will be in good shape or that it won’t have serious issues in the future. It simply increases the chances of it being in good condition compared to a branded auto. That’s why you should always have a professional inspect any used car you plan on buying, regardless of what its title says.
Can You Sell A Car Without A Title?
Technically, you can sell a car without a title, depending on the state you live in. That being said, you always need proof of ownership, and it is much harder to sell an auto without a title.
The Simple Solution: Get A New Title
If you lost the title and want to sell your car, just ask the DMV for a new one. Most states will have details of the process on their website, or you can visit the DMV. Expect to pay a small fee and provide some crucial information about the auto.
See If Your State Has Alternative Title Options
Depending on where you live, there may be some other ways to get a title for a car. For example, Virginia offers abandoned vehicle titles. That process involves the state using the VIN to try contacting the last owner and give them the right of refusal. Or mechanics may be able to file a lien for unpaid bills with proper documentation.
Use A Bill Of Sale – In Some Cases
Depending on the age of the vehicle and where you live, you may be able to sell it with a bill of sale instead of a title. This is because some states didn’t start issuing titles until 1975. So, if you have an auto older than this, it may not have a title. In that case, you would have to follow the state’s process for getting a bill of sale. The DMV will likely have a form for you to fill out and use.
If you are using a bill of sale, it is also smart to have everything notarized. This simply gives you and the buyer more confidence.
Trade In The Car
If you live in a state with an Electronic Lien and Titling (ELT) Program, you won’t need a physical title to trade in your auto. The dealership you trade the auto in at will simply access the ELT system to confirm your ownership. They will also use the program to transfer the ownership to themselves.
Conclusion
A branded title indicates that the auto had major problems, such as water damage or false odometer readings, or was declared a total loss. Importantly, the issue has since been resolved, and the state deemed the auto safe to drive. There is an increased risk of hidden damage with branded autos. Still, they are also much more affordable than other comparable vehicles.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He’s been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What’s Your Story, and more.
