Learn why a title report is one of the first things to look at when deciding to purchase a used vehicle!
Purchasing a used or new car can be an overwhelming experience. You may spend hours or days negotiating prices and dealing with unexpected fees. Then when you finally sit down to sign off, you’re given mountains of confusing paperwork. Title report, bill of sale, odometer disclosure. It can feel like a process that never ends.
For a used car, however, this process can feel doubly draining. As many used vehicles may experience wear and tear, malfunctions, or previous liens, you want a clear idea of the viability of the car. What problems has it had in the past? How long of a lifespan does it have left? Are there any outstanding liens on it?
Knowing the answers to these questions can save you a world of trouble and money down the road. Thankfully, the answer to most of these questions can be found on your title report. In this blog, we’ll explain to you exactly what a title report is and why it’s one of the most critical documents you need to look at before you buy used vehicles
. Read on!
Although all the paperwork associated with purchasing a used vehicle deserves a watchful eye, title reports are arguably the most vital. But what is a title report? And is it different from a title check?
Fortunately, the answer is no. Title reports and title checks are essentially one and the same. Therefore, when you or a dealership runs a title check, it simply means a title report is being obtained.
What is a title report?
Similar to a title report like that of real estate property, a car title report gives you insight into things you need to know about a car you can’t see just by looking. You’ll find things like:
- Name of the previous owner
- Vehicle Identification Number (VIN) for the vehicle
- Odometer reading
- Weight class
- Registration records
- Outstanding lien information (with associated lienholder names)
- Car history
While a car’s history can tell you many things, let’s first discuss why obtaining the title should be a priority.
Why do you need a used car’s title report?
Most importantly, the information found on a title report lets you know if the car is clean for ownership. If there are liens on the vehicle, they’ll show up here.
A lien could be placed on a car for unpaid repairs or collateral for a loan, and in some cases, a lien could even be placed for things like unpaid child support.
No matter what it was placed for, however, once you’re made aware of it through the title report, you’ll have clarity on making a decision. If you want to proceed with the purchase of the car, you can proceed in a few ways:
- Ask the owner to satisfy the outstanding payments and provide proof that it was satisfied before purchasing the vehicle.
- Speak with the lienholder and satisfy the lien yourself when purchasing the vehicle.
- Speak with the lienholder and take on payments towards the lien with the purchase price of the vehicle.
If you decide to do options #2 or #3, this could give you buying power with the owner. In exchange for taking on the liens, for example, perhaps you can negotiate a lower price of the car.
Additionally, it’s important to note that although extremely rare, there are instances when a title report may not reveal a lien on a car. For one reason or another, this can happen due to human error and companies failing to document a lien properly.
For this reason, you should also take an additional act of precaution when purchasing a used car and ask the seller if there are any other liens that may be on the vehicle. You’ll especially want to do this if you’re purchasing as private sale through a private party.
Different types of title reports
Unfortunately, when obtaining a title report, you may not always receive a clean title. Even if there aren’t any liens present, there may be other things, as there are different types of title reports and associated risks that come with them. In this section, we’ll share more on the different types of title reports and the risks that come along with them.
Instead of receiving proof of a clean title, you may receive a salvage title and wonder, “what does salvage title mean?”
A salvage title means that the vehicle was declared a total loss. It could have had collision damage from an accident, fire damage, flood damage, or something else entirely. No matter the reason, an insurance company deemed it inoperable and declared it as such.
In these instances, insurance companies typically sell the car to a junkyard or auto repair company that then rebuild or “salvage” the vehicle.
There’s one thing you need to know with a salvaged title: Until you get an inspection from the state DMV office and obtain a rebuilt title, a car with a “salvaged” title will not be allowed to operate on the road.
If you’re merely looking for scrap parts, this may not be an issue for you. But this may not be the car for you if you’re looking for something to get you from point A to B. With car parts and labor fees, getting it to an operable status may be more effort and money than it’s worth.
*For a full list of reasons that Texas may produce a salvage title on a car, read more here
We’ve covered what a salvage title is, which, interestingly enough, leads us to your likely next question: What does a rebuilt title mean?
A rebuilt title means that a car was previously classified as a salvaged title, but after being repaired, it went through a rigorous inspection with the state it’s in and passed its qualifications. After that, it was classified as “rebuilt.”
With a rebuilt title, a car is permitted and deemed safe to drive on the road.
However, there are still risks to buying a salvaged/rebuilt car. Those include:
- Trouble attaining financing as most lenders see salvaged vehicles as risky.
- Trouble acquiring insurance as insurance companies also see salvaged vehicles as risks on the road.
- Trouble if you ever decide in the future to trade-in the car as salvaged titles instantly reduce a vehicle’s market value.
Branded titles can sometimes be associated with salvage or rebuilt titles, called a “salvage brand title” or “rebuilt brand title.” However, branded titles can also be used to explain damage a car has experienced that was not caused by accidents.
If your title report shows a branded title and doesn’t say salvaged or rebuilt, it could mean that the car had extensive mechanical issues. This could be issues with the odometer, faulty parts, or other defects that caused the car to be continually returned to the manufacturer.
Used cars with a branded title can be cheaper, but the risks to buying a branded car include those listed above for salvaged and rebuilt titles. However, these cars also run the added risk of continual mechanical failure, which can be a costly headache. And although Texas’s Lemon Law can help you fix manufacturer errors even if the car is out of warranty, this is an added to-do car owners often don’t have the time for.
We want to note that buying a car with a salvage, rebuilt, or branded title isn’t always bad news! When given these titles and placed back on the market, a vehicle will have gone through a mandatory inspection from the department of motor vehicles to confirm it’s safe to drive. However, because of its history, buyers of a used car should still use what they find in their title report to make informed decisions and do even more digging to ensure their investment is a good one.
Title Report Vs. Vehicle History Report
A title report will tell you essential information when it comes to ownership of the vehicle and a car’s history. But if you receive a salvaged or junk title and want to find out more about a car, your title can help with that too. It gives you the necessary information to access other vital documents, such as a vehicle history report.
You can order a vehicle history report with the VIN# and other registration records and classifications in hand from your title report. This report will help give you an even clearer picture of the history of your vehicle.
In a vehicle history report, you’ll learn:
- The number of car accidents it's been in
- Damage it’s suffered: water damage, fire damage etc.
- The total amount of owners it had
- The approximate mileage it should be at
- If it’s been adequately serviced
- Where it’s been inspected and registered
- If there are any open recalls
And since you want to ensure you’re getting a good deal for your money, you can imagine how invaluable this extra information is!
Previous damage information could give you an idea of specific parts of the car to look at. The difference in the approximate mileage and what you see could raise red flags and much more.
Armed with information, you now know what a salvage title is, what a branded title is, and what a rebuilt title means.
While your car dealer should provide you with these reports in the car buying process, you can also obtain your own report. Title reports and vehicle history reports can be obtained via sites like Kelley Blue Book, Carfax or even on your state’s DMV site
And although buying a used car can leave you feeling exhausted by the time you’re ready to sign on the dotted line, we hope this information can give you confidence and peace of mind in making your decision!
For more information about Germania and our insurance products, request a free quote online, or reach out to your local Germania Authorized Agent today!