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You found the perfect car, priced well below what you expected. Before sealing the deal, you look up the car’s information and to your surprise find that the car has a branded title. What does that mean, and is this a deal killer?
A branded title indicates that the car had extensive damage, issues with its odometers, or a defect that caused it to be bought back by the manufacturer. A car with a branded title can be a great bargain, but you need to be aware of drawbacks that may make the deal not worth it.
Key Takeaways
- A branded title says the car was once declared a total loss or comes with some other major problem.
- Cars with branded titles have been repaired or rebuilt and sold.
- A branded title can mean the car was damaged in a flood, its odometer was rolled back, or it was involved in a major accident.
- Vehicles with branded titles may cost 20% to 40% less than the Kelley Blue Book value of the same cars with a clean title.
- Securing financing and insurance for cars with branded titles may be difficult.
Types of Branded Titles
A branded title lasts for the car’s lifetime. Even if the car is repaired to perfection, the branded title distinction can’t be removed.
Branded titles are handled differently state by state. Generally, they fall into a handful of categories:
Altered odometer
A car’s mileage affects its value, so states demand odometer readings are reported when a vehicle is registered. Odometer readings are generally recorded when cars are brought to a mechanic.
Still, odometer readings aren’t always accurate. More than 450,000 vehicles per year are sold with false odometer readings, according to the National Highway Traffic Safety Administration.
If the odometer has been found to reflect fewer miles than the car actually drove, the title will have an “altered odometer” or “odometer rollback” title.
Rebuilt title brand
If a car in an accident is declared a total loss, the insurance company will usually sell the vehicle at auction to try and recoup some of its costs. The vehicle may be bought by a repair shop that may try to fix and sell the car.
After these repairs, the vehicle has to pass a safety inspection before it’s considered usable. If it passes, the state will issue the vehicle a branded title with a rebuilt or reconstructed label. The title notifies future owners that the car was damaged and rebuilt. The label warns prospective owners that the structural or mechanical integrity of the vehicle may have been affected.
Salvage branded
A car with a salvage title was in a collision and declared a total loss. To qualify as a total loss, insurers estimate the cost of the repairs plus the scrap value of the car. The car will be declared a total loss if the necessary repairs and scrap value range from a certain percentage of the car’s value, depending on what state you live in. If the insurance company decides the car is a total loss, it’s issued a salvage branded title.
Water damage brand
Water can damage a car’s interior, create mold and mildew growth, and harm the engine. In some states, cars that were damaged by water or involved in a flood will get a water damage branded title.
If you’re considering a salvage or rebuilt vehicle, plan to have it checked out by a trusted mechanic to help spot any potential issues before money changes hands.
Pros and Cons of Branded Titles
A car with a branded title might look new and run great, and buying one may be tempting. But before handing over your hard-earned money, consider these pros and cons:
Pros
- Branded title cars are cheaper: If you’re on a budget and looking for reliable, cheap wheels, a car with a branded title might be the answer. Branded title vehicles may cost half the price of a comparable car with a clean title.
- A newer vehicle may be within your budget: By purchasing a branded title car, you can stretch your budget. You can get a vehicle with more features than you’d otherwise be able to afford.
Cons
- Reselling your branded title car may present problems: Buyers may be suspicious of a branded title car, and the title may also slash the resale value.
- Financing may be difficult: Many lenders will only finance cars with clean titles. If your selected vehicle has a branded title, you may have to shop around for a car loan, and may pay higher interest.
- You may struggle to find an insurer: Not all insurance companies will insure cars with branded titles, so you may have to shop around for coverage.
- Mechanical issues may be lurking: You’re taking a gamble with a car with a branded title. A car that has had major damage or other issues may not be reliable, and you might end up paying for expensive repairs.
Pros & Cons of a Branded Title
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May be more difficult to resell
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Financing could be more expensive
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Insurance could be more expensive
How to Find Out If a Car Has a Branded Title
You can use the following tools to find out if a car has a branded title:
- CARFAX: Though CarFax reports aren’t cheap—a single CARFAX report is $39.99—they can be useful in the car-buying process. Not only will CARFAX show if a car has a branded title, but it will also show you when the title was issued, as well as maintenance records and how many owners the vehicle had.
- VINCheck: A free service offered by the National Insurance Crime Bureau, VINCheck allows you to see if a car has been stolen or reported as a salvage vehicle by participating insurance companies.
For people who are knowledgeable about cars and are looking for a bargain, a car with a branded title can be an excellent buy. However, purchasing a car with a branded title isn’t without risk. Before buying a car with a branded title, have an independent mechanic inspect the vehicle and look up its repair records to see what work was done.
What is the difference between a branded title and salvage title?
A branded title indicates that a vehicle has been damaged and repaired back to a safe and drivable condition. A salvage title, on the other hand, indicates that the car is damaged beyond repair and is no longer legally drivable – it is only valuable for parts and scrap.
Can branded titles get insured?
Yes, a car with branded title can be insured, but it may cost you more than with a clean title.
Is buying a car with branded title worth it?
Buying a car with a branded title can be a bit of a gamble. If you’re willing to take the risk—and all goes well—it could turn out to be a rare bargain. Otherwise, it could end up costing you more than simply buying a car with a clean title in the first place due to unforeseen mechanical or performance issues, higher insurance and financing costs, and additional headaches trying to resell the car.
The Bottom Line
Buying a car with a branded title can be risky, but an affordable option. Branded title means that the vehicle has sustained significant damage in the past, but has since been restored to good condition. Still, mechanical issues can linger and the costs to keep the car insured can be higher. And remember, branded title lasts for the car’s lifetime. Even if the car is repaired to perfection, the branded title mark cannot be removed.