What Does A “Clean Title” Mean?
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When you are in the market for a used car, finding out the vehicle’s history becomes crucial for the purchase process. One of the most apparent indicators of a vehicle’s history is its title status. So what does a clean title mean? What about a salvage title? And why does it matter? Read on to learn more about clean, salvage, and rebuilt titles.
What Does A Clean Title Mean?
A vehicle title is a legal government document issued by your local motor vehicle office that records a vehicle’s history, ownership status, and other important information.
So what does a clean title mean exactly? A clean title suggests that the vehicle you are hoping to purchase has never been in an accident so significant that it was deemed as a total loss. However, it does not mean that the vehicle has never been in an accident at all.
It is important to note that a clean title does not mean a lack of problems. Clean titles can still hide some severe issues. A car with a clean title can still be a lemon, be subject to many recalls, have a history of severe damage, or have significant defects. Even if a car has a clean title, you will still want to run the VIN through a resource such as CARFAX® to see any accident history. In addition, it always pays to have any used vehicle you are considering purchasing inspected by an independent mechanic.
Most used cars will have clean titles on the market, as it is the default title unless a vehicle has been significantly damaged. Some sellers will attempt to hide a vehicle’s salvage title at first, but one indicator of a car without a clean title is an asking price well below the typical market value.
Thankfully, it is illegal to sell a car in all 50 states with a salvage or rebuilt title without disclosing it to the buyer. This information is also readily found online as a permanent part of the vehicle’s history. If it is important to you to purchase a car with a clean title, you should always be able to find out the truth before completing the sale.
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What Is A Salvage Title?
The opposite of a clean title is a salvage title. This means the vehicle has been damaged beyond the point the insurance company deems acceptable and deemed a loss. Usually, this means that the cost of the repairs was 50% or more of the vehicle’s value. You may also hear this referred to as a “totaled” vehicle. In some states, a salvage title can mean the car was flooded. Lastly, a salvage title could also mean the vehicle was stolen and later recovered.
Each state has its set ratio of damage to value that is acceptable before a car is deemed salvage. While the requirements may vary from state to state, generally, this can be anywhere between 50-100%. This is referred to as the total loss threshold. Once the damage on a vehicle surpasses that threshold, the state will issue a salvage title.
For example, in Texas, a vehicle is not considered salvage until the cost to repair the damage meets or exceeds 100% of the car’s current value. So a vehicle with a current value of $20,000 will be considered a loss if the repairs reach $20,000. On the other hand, in Louisiana, a salvage title is triggered once the damage meets or exceeds 75%. So a car with a current value of $20,000 will be considered a loss if the repairs reach $15,000.
In most cases, salvage vehicles are not considered street legal until the necessary repairs have been performed and a rebuilt title has been issued. Once a rebuilt title has been issued, the vehicle can be driven on the roads once again. The requirements to pass inspection and gain a new title also vary from state to state.
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Why Is A Clean Title Important?
Although a vehicle with a salvage title can sometimes look like a great bargain, buying a car with anything less than a clean title carries some risk and comes with some downsides.
Having the designation of a salvage title stays with the history of the vehicle even if it has been rebuilt and can significantly reduce the resale or trade-in value of the car. This may make the vehicle harder to sell later if you wish to resell. This can also make the vehicle difficult to insure or pay higher rates for your car insurance.
In addition, even if a car has been rebuilt, there can still be significant frame damage and other deficits to the vehicle that can pose a safety hazard to you and your family. If you still want to purchase a salvage car, it is imperative to have the car thoroughly inspected by an independent mechanic before you sign on the dotted line.
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Ready To Buy?
Now that you’ve learned the answers to the questions of “What does a clean title mean?” and “What does a salvage title mean?” you are more informed on the things to look out for when considering a used vehicle. In some cases, a salvage vehicle can be a good deal, especially if the damage was primarily cosmetic and has since been effectively repaired. Other buyers prefer only to buy cars that have a clean title to ensure they avoid any potential problems or loss of value.
Whatever decision you make, check the car’s VIN, recall status, and accident history before purchasing. In addition, always test drive any vehicle before completing your purchase and have the vehicle inspected whenever possible. Research can go a long way to avoid potential issues, even with a clean title. Happy shopping!
FAQs About Clean Titles
Q: Is there anything I need to worry about when buying a vehicle with a clean title?
A: Buying a vehicle is a sizable investment, so you’re right to be worried. For the most part, you should be cautious. Remember that a clean title doesn’t mean that the vehicle with a clean title can still have a dozen mechanical problems and easily hide sloppy repair jobs. The best approach is always to demand pre-purchase inspection so you know exactly what you’re buying.
Q: Are cars with clean titles more expensive?
A: Generally, yes. Vehicles with clean titles will be more expensive than those with salvage or rebuilt titles. Simply put, there are far fewer people willing to take their chances on a rebuilt vehicle than there are who would buy a car in presumably good condition.
Q: What can I do if I have a suspicious clean title?
A: There’s a fraudulent act called “title washing” where sellers obtain a “clean” title for a rebuilt or salvaged car from a different state where its issues aren’t recognized. In this case, you should immediately head over to the DMV and verify all information about your car title. You may want to visit an attorney’s office if you’re looking to get your money back.
Q: Can a car with previous accident damage still have a clean title?
A: Yes, it’s possible. Minor to moderate accidents that don’t result in the car being declared a total loss by an insurance company won’t affect the title status. However, significant accidents that lead to a total loss declaration will result in a salvage title.
Q: Can a car’s title status change from clean to salvage?
A: Yes, a car’s title can change from clean to salvage if it sustains significant damage. This typically happens when the cost of repairs exceeds a certain percentage of the car’s value (usually 75-90%, depending on the state). The insurance company will then declare it a total loss, resulting in a salvage title.
Q: Do all states use the same criteria for clean titles?
A: No, title classifications can vary by state. What qualifies as a clean title in one state might be considered a salvage title in another. This discrepancy is why it’s crucial to check a vehicle’s history across multiple states when purchasing a used car.
Q: Can I get full coverage insurance on a car with a clean title that was previously salvaged in another state?
A: It’s possible, but challenging. Some insurance companies may offer full coverage if the car has been properly repaired and inspected. However, many insurers are hesitant to provide comprehensive coverage for cars with a history of severe damage, even if they currently have a clean title.
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