From braving a sea of car salespeople and negotiating costs to completing hours of research and handpicking the perfect new air freshener, buying a car is a significant financial milestone. Most car buyers prioritize getting their hands on a vehicle that satisfies their need for both quality and affordability, so the option to buy a cheaper car that’s been subject to damage can feel attractive and nerve-wracking all at the same time.
If the vehicle you plan to purchase has sustained extensive physical damage, you’ll want to know the accident history upfront. Luckily, this information is typically reflected in the car’s title. A vehicle can earn a “branded title,” or a title that indicates a vehicle’s compromised physical integrity for various reasons. The most common types of title brands include the following:
- Lemon titles: Alert buyers of excessively defective vehicles
- Odometer rollback titles: Cars that were subject to illegal odometer tampering
- Water and hail damage titles: Rebuilt titles for vehicles declared a loss by insurance companies
- Salvage titles: Vehicles where the repair costs exceed the retail value
Once you’ve found a car that checks-off your list of must-haves, it can feel discouraging to learn that the vehicle has a branded or salvage title. However, this unpleasant news doesn’t have to be a dealbreaker, seeing that salvage or branded title cars can be thousands of dollars cheaper.
Still, being cautious is a must since most branded title vehicles have been damaged well beyond what an insurance company deemed reasonable to repair. Driving off the lot with a heavier wallet can be tempting, but you’ll want to do your research and weigh the pros and cons before you take your new ride for a spin.
The difference between a salvage title and a branded title
Understanding the difference between a salvage title and a branded title is critical to ensuring that you make a responsible purchase. For those drivers unfamiliar, a branded title might include several descriptions of the car’s damage. In some cases, a salvage title might make an appearance.
A car with a salvage title has sustained significant damage, and an insurance company deemed the repairs to exceed 50-90% of the car’s fair market value. Salvage title cars are illegal to drive but are still eligible to be sold to those planning to disassemble the vehicle for parts or safely rebuild it. A branded title, however, as mentioned above, can be assigned to a car for several reasons, some of which may not impact safety when driving.
Pros of purchasing a branded title car
You’ll likely land a major discount
Due to the damage sustained, branded title vehicles are significantly cheaper than cars with clean titles. If you’re worried about being able to afford a new ride, a cosmetically damaged branded title car may have a low enough price point for you.
You can score parts for cheap.
If you’re looking to disassemble a car and sell its parts, or you’re a grease-monkey who loves automotive tinkering, a salvage title car can offer you low-cost parts that allow you to turn a profit well worth the time and effort invested.
You might get lucky with a car that’s still safe
Some cars get stuck with a branded title for purely cosmetic damage caused by natural forces such as water or hail. While cosmetic distress is expensive to repair, it doesn’t necessarily impact the vehicle’s mechanical integrity. If you’re more worried about cost than you are about the car’s appearance, a branded title option may be best for you.
Cons of Purchasing a Branded Title Car
The resale value will be lower
Unless you plan to keep your vehicle for life, lowered resale value is a reasonable concern. Purchasing a title brand car often comes with quite the load baggage, bound to repel prospective buyers. Yet another pitfall of branded title cars is that finding accurate values borders the near-impossible.
Your insurance coverage will be limited
Most insurance companies offer limited coverage for branded title cars due to how difficult it is to assess new damage. Unfortunately, some companies will refuse to provide insurance coverage altogether.
You might not leave with all of the necessary information
While a title typically covers general information related to a vehicle, vital details are often left out. Unless you can inspect the vehicle mechanically, you might never be 100% sure of the car’s condition.
Those who purchase such vehicles become more vulnerable to unscrupulous sales practices or title washing. While a branded title car undoubtedly has its benefits, the risks involved are inevitable. That said, you may want to buckle up for a bumpy ride, should you decide to gamble on a branded title car.