- It’s illegal to turn a rebuilt or salvage title into a clean title in the US. Scammers accomplish this by forging clean titles or moving cars across state lines.
- To confirm a vehicle’s title status, run a VIN check or request a vehicle history report online.
- Before purchasing a rebuilt vehicle, have it inspected by a mechanic and get quotes from multiple insurers to make sure you can find affordable coverage.
Is it legal to turn a rebuilt title clean?
Altering a rebuilt or salvage title to a clean title is a federal offense. Once a vehicle has sustained major damage and its title is labeled rebuilt or salvage, it’s legally impossible for it to be clean again. Illegally altering or producing fake titles is a crime known as title washing, which can include any of the following fraudulent acts: Creating or obtaining an illegal title that hides details about a vehicle’s past Physically altering or editing a title to read as clean Acquiring false documents to make a rebuilt or salvage vehicle look clean Skipping owners who didn’t sign the title Tampering with odometer readings
Scammers forge clean titles to charge higher prices for rebuilt cars. In forgery cases, scammers create fake documents that look like a clean title—they indicate that the vehicle never sustained severe damage and/or that no other creditor, insurance company, or third party has any ownership of the vehicle. The goal is to fool potential buyers into thinking the vehicle is clean and has never been in a major accident, which means fraudulent dealers can charge a higher price. Scammers can also move cars between states with differing or lax title laws. Since there’s no federal standard for used car title branding, what one state may consider a salvage might be “clean” in a different state. Punishments for title washing vary by state and the severity of the fraud. In severe cases, convicted dealers can face up to 116 months in prison and fines over $600,000.
Types of Titles
Clean title Clean titles show that a vehicle has never been in a severe accident that resulted in the car being considered totaled by an insurance company. The definition of “totaled” is different from insurer to insurer, but usually means that the cost to repair a vehicle is 70-90% of the vehicle’s value, making it uneconomical to fix. A clean title does not guarantee that the vehicle hasn’t sustained some minor damage or has no mechanical issues. It only means that it hasn’t been totaled.
Salvage title Salvage titles are given to vehicles that have been wrecked, destroyed, or damaged so much that the insurer considers it totaled. These titles usually have the word “salvage” across the top to differentiate them from clean titles, but this may vary from state to state. Vehicles with a salvage title are considered unsafe and illegal to drive on open roads. There are multiple ways to get rid of a totaled vehicle, but typically, the insurer takes ownership and pays the owner the cash value of the vehicle (minus the deductible). Salvage vehicles are typically sold by the insurer to third parties interested in repairing and selling it (with a rebuilt title) or breaking it down for parts (with a junk title). Salvage vehicles can’t be legally driven, sold, or registered until they’ve been repaired and inspected.
Rebuilt title Rebuilt titles (also called reconstructed titles) are given to salvage vehicles that have been repaired enough to safely and legally be driven on US roads. The title serves to notify potential buyers of the vehicle’s history and to show that it has passed safety inspections (in some states). However, some states have no or very lax requirements about informing buyers of the vehicle’s past. It’s a possibility that repair techs miss something when rebuilding a vehicle. Rebuilt titles alert buyers to the chance that unnoticed issues could cause problems down the road.
Nonrepairable or junk title A junk title indicates that a vehicle is only good for parts or scrap metal. These vehicles are usually damaged to the point that it’s impossible to use the frame or chassis to construct a new vehicle, or that the vehicle is incapable of being driven safely. Junk vehicles cannot be driven, retitled, or registered, although exact specifications and regulations may vary from state to state.
Clear title A clear title shows that the vehicle is owned in full by the owner. When a vehicle is financed (has a lien against it), the lender holds the vehicle’s title and is considered the legal owner until the buyer pays back the loan in full. Once the loan is paid, the buyer becomes the legal owner and obtains a clear title.
Checking a Vehicle’s Title History
Run a free VIN check on the vehicle. A VIN (vehicle identification number) check will reveal everything about a car’s basic history, including accidents, repairs, and insurance claims, as well as provide the vehicle’s manufacturing information. Run a basic VIN check for free by entering your vehicle’s 17-digit VIN into a VIN report website like the National Insurance Crime Bureau or VehicleHistory.com. A VIN check might not include title information, but it will inform you of prior accidents or damage. This is valuable information if the deal you’re considering seems too good to be true. VINs are usually located on the dashboard or on the driver’s side door jamb. Federal law requires them to be legible and in clear sight—if a vehicle’s VIN is gone or hard to read, walk away from the deal.
Pay for a vehicle history report. State DMVs keep records of every registered vehicle’s accident history and title status. Check your state’s DMV website for how to get a full history report. Typically, you’ll pay a small search fee online or by mail (usually around $10) and provide the vehicle’s license plate number. Then, the DMV will search their records and send you their report after you pay an ordering fee (usually around $15). History reports are more thorough than VIN checks and will definitely include accident and title information. They may also include information on odometer fraud. It’s possible to run a free basic vehicle history report yourself on sites like CarFax or AutoCheck, but the results may not provide all the information you’re looking for.
Precautions for Purchasing Rebuilt Vehicles
Have a certified mechanic inspect a rebuilt car before you buy it. Even if the vehicle seems fantastic during a test drive, take it to a mechanic just in case. Private-party sellers usually don’t mind, but some auto dealers may push back and insist it’s already been inspected—take it in anyway. A mechanic’s inspection usually costs $100 to $300, but can save you big money if it finds evidence of damage not mentioned by the seller.
Check if your insurance company will cover a rebuilt car. Get and compare quotes from multiple insurers before purchasing a rebuilt car to make sure you can find coverage at an affordable price. Rebuilt cars may have lingering issues, so some companies might not insure them at all while others will charge significantly more for coverage. In some cases, companies may provide liability coverage, but no comprehensive or collision coverage. Companies that offer insurance for rebuilt vehicles include American Family, Farmers, Infinity, Kemper, Nationwide, Root, State Farm, and USAA (to active military members or veterans and their families).
Contact law enforcement if you think you bought a title washed vehicle. Unfortunately, some buyers unknowingly leave the dealership lot with a title washed car. If a mechanic finds evidence of damage that was omitted by the seller or you find accident reports through a VIN check or vehicle history report after purchase, contact local law enforcement right away and supply any paperwork related to the purchase of the vehicle (like the title, registration, or bill of sale). If the title washing scheme goes to court and the seller is found guilty, they’ll be slapped with hefty legal fees and potential jail time in addition to paying damages to the car buyer.
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