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can you get an auto loan on a rebuilt title

Can You Get an Auto Loan on a Rebuilt Title?

Purchasing a car, especially your first one, can be an exciting endeavor. You spend your time researching fuel efficiency, safety, design, and the best brands so you can uncover your dream vehicle that satisfies all your needs and preferences. But if you’re looking to save money by purchasing a used vehicle, check if it has a branded title, so you won’t have to wonder later, “Can you get an auto loan on a rebuilt title?”

A branded title can affect how you buy and maintain your automobile, so we’ll break down the difference between branded and auto title loans in Phoenix. We’ll also explain how titles affect auto loans and if you can still receive a loan during your purchasing journey.

Auto Titles Vs. Branded Titles

Auto Titles

A car title is a necessary certificate that every vehicle owner must have as proof of ownership. The state government supplies these legal documents whenever an automobile changes hands through a transfer, purchase, or full auto loan repayment. Branded titles, however, indicate an issue with the vehicle, and there are two types you should be aware of.

Salvage Branded Titles

Salvage titles mean a vehicle has been through irreversible natural or man-made damage, like a major car accident, extreme flood or hurricane destruction, or a rolled-back odometer. If an insurance company deems the automobile a total loss and no longer streetworthy, they’ll give it a salvage or junk title.

With it, it’ll be nearly impossible to receive a car loan since the car has a low value, and you’ll have high borrowing costs with little collateral (since the car itself is the collateral). Insurance companies will also see the car as dangerous due to little or no safety features, refusing to insure you.

Rebuilt Titles

In some cases, an insurance company rates a vehicle as a total loss, but major repairs can save it. If this occurs, and you pass a state inspection, it upgrades from a salvage to a reconstructed or rebuilt title. That means you can legally drive your car on the road and find an insurance company to cover you, but you’ll never regain a clean title again.

Do Rebuilt Titles Affect Auto Loans?

Like salvage branded titles, rebuilt ones are still harder to receive auto loans on compared to clean titles. Not only do these vehicles have a lower value, but their exact value is difficult to assess, making it a risky investment for lenders. That’s why when you’re looking for auto financing for vehicles with rebuilt titles, you should try to make yourself look more appealing as a low-risk borrower by doing the following:

  • Prove you have a good driving history (at least in recent years) by bringing in a copy of your clean driving record.

  • Prepare the vehicle by having professionals repair and inspect it (to lower the potential interest rate if you obtain rebuilt title auto loan eligibility).

  • Provide an overview of your credit history so they can check your credit score, recently filed claims, and other valuable information.

Unfortunately, even though the answer to “Can you get an auto loan on a rebuilt title?” is a yes if you have the above credentials, you’ll still notice many disadvantages that owners of traditional car titles don’t have. For instance, securing an auto loan with a rebuilt title means high-interest loans that have interest charges of 300% or higher.

The loan will also be short-term, increasing monthly premium payments and lowering your risk of having a negative equity. These short-term loans usually benefit those with poor credit scores or a bad borrowing history.

Opting for Personal Loans

Other financing options for rebuilt title cars include taking out a personal loan. Unlike when getting approved for car loans on rebuilt titles, personal loans are unsecured, meaning you don’t need collateral.  While that guarantees a higher interest rate than car loans, personal loans don’t mandate full coverage insurance, so you can opt for partial coverage to save money.

However, some states have a minimum coverage requirement you must meet, while others require you to have liability insurance. Still, it can prove more cost-effective than full coverage options.

For Title Loans and More!

Understanding your used car’s branded title and financing options is crucial for successful insuring and drivability. So, when you find yourself asking, “Can you get an auto loan on a rebuilt title?” or need to learn about the loan considerations for rebuilt title vehicles, call (520) 200-5626. Our #1 team at Cheap Title Loans will match you with the lowest rates today!

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