As a used car buyer, it’s essential to know the difference between a clean title and a branded title. Many buyers end up with damaged vehicles simply because they can’t tell the difference.
A clean title shows that a vehicle has not been involved in any significant damage. This means when a vehicle doesn’t have one, you may be in for an unpleasant surprise in the future.
Avoiding this kind of situation is easy if you know the difference between the different types of branded titles. This article clearly explains everything about clean titles, how to verify them, and what to do if a title is not clean.
What Does a Clean Title Mean?
Car titles are issued when owners pay for their vehicles in full. If you are still paying for it monthly, you might need to get the lienholder’s permission to get the title.
The car title serves as proof of ownership of vehicles. It shows their basic vehicle information, like the Vehicle Identification Number (VIN), the year, make, model of the car, the owner’s full name, and the vehicle history status.
The vehicle history status column typically contains a stamp indicating the car’s past. For example, if the car has been in junkyard, the vehicle history status column will say ‘Salvage’, if it has been repaired from a total breakdown, it will say ‘Rebuilt’.
Now, a clean title – indicated by not having anything under the vehicle history status column – shows that a vehicle has never been deemed a total loss by an insurance company. This means that it has not suffered any significant damage from accidents, floods, or any other incidents.
This is the ideal vehicle every used car buyer wants to end up with at the end of a sale. Why? Let’s talk a little bit about the benefits,
Why is a Clean Title Important?
When a vehicle’s title is “clean”, it just clearly says there isn’t a single problem with the vehicle. This, in turn, increases its resale value as it’s as close to pristine as it can get on paper.
Since the vehicle is seen as much safer and reliable, its value goes up too. They are just as good as new – at least on paper – since new cars have clean titles by default.
Despite being pricier than the typical used cars, the premium is definitely worth it. Cars with clean titles have much more resale value, which means you are more likely to use the vehicle for longer without any trouble. Plus, you may still receive good resale value when it’s time to upgrade to another ride.
Differences Between Clean, Salvage, and Rebuilt Titles
Before we move on into more detail, you should understand the difference between clean, salvage and rebuilt titles.
Salvage Title vs. Clean Title
A salvage title is issued to vehicles that have been significantly damaged in the past to the extent that the cost of repairs exceeds the vehicle’s value. In such cases, the insurance company declares the vehicle a total loss and is issued a salvage title to show this. On the other hand, a clean title shows that a vehicle has never been badly damaged.
Although salvage vehicles are often more affordable than others, you need to be cautious when buying these types of vehicles because they may face higher repair costs and lower resale values in the future.
READ ALSO: The Complete Guide to Get a Salvage Title Cleared from Your Car
Rebuilt Title vs. Clean Title
A rebuilt title is assigned to vehicles that were previously issued a salvage title but have since been repaired and inspected to meet safety standards.
While a rebuilt title indicates that the vehicle is now roadworthy, it still carries a stigma compared to a clean title. Buyers may be wary of rebuilt titles due to the vehicle’s history, which can affect its resale value, safety, and overall desirability.
Thanks to title check tools and other VIN tools, anyone can view history records for salvage and rebuilt vehicles and avoid the challenges associated with them.
Why a Clean Title is Important for Buyers and Sellers
Although we covered a bit of this already, we will still take a closer look at the reason why you need to get a vehicle with a clean title.
For Buyers
Some of the benefits that come with getting a vehicle with a clean title are:
- Ownership confirmation: When you see a clean title, you can see clearly that the person selling the vehicle is the rightful owner. Some cars come with lien and loan information on the titles and you can review this to see if there’s a third party involved or if there are unresolved legal or financial issues.
- Smoother transactions: Buying a car with a clean title is often straightforward compared to buying a branded one. You can avoid the stress that comes with unexpected hurdles and hidden car problems.
- Resale value: If you decide to sell in the future, you will get a better resale value and smile to the bank.
- Loan approval: Most financing companies don’t consider applications for car with significant damage records. It’s just a lot of risk that they may not be willing to bear. A clean title car, on the other hand, enjoys better conditions and smooth transactions. They are also easier to insure.
- Reduced repair costs: A vehicle with little or no damage in the past shouldn’t require so many visits to the repair shop and if there are any, it’s going to be more affordable than a branded vehicle.
For Sellers
Sellers enjoy just as many benefits as buyers when shopping for used cars with clean titles on the market. Some of these benefits include:
- Better marketability: For sellers, a clean vehicle title can significantly enhance the vehicle’s marketability.
- Higher Resale Value: Clean titles enhance the vehicle’s market value, attracting more buyers willing to pay a premium.
- Easier Transactions: Vehicles with clean titles are often easier to sell compared to their branded counterparts. Expect a simple process and reduced potential legal complications.
- Buyer Confidence: A clean title assures buyers of the vehicle’s reliability, leading to quicker sales.
- No Liens or Disputes: Clean or clear titles confirm ownership without financial encumbrances, leading to smoother ownership transfer.
READ ALSO: What Does an Exempt Mileage Title Mean for a Car?
How to Verify a Clean Title
Spotting a clean title is easy as long as you pay apt attention to detail. Here are the easiest tips to remember to verify if a vehicle has a clean title or not:
Using a VIN Decoder
A VIN decoder is one of the many essential tools in purchasing a car. This is due to their capability of giving detailed information on a vehicle’s specifications and past history records, including whether or not the vehicle has a clean title – or any other title for that matter.
To find out whether there are any title brand records for a given vehicle, all you need to do is access its VIN located on the dashboard of the vehicle, the driver’s side door jamb, or the registration documents or title. It’s usually 17 characters long but shorter in classic (vintage) cars.
When you find the VIN, enter it into the VIN decoder and get a detailed vehicle history report. The history report will tell if the vehicle has clean records or not.
Reviewing the Title Document
Another way is to review the title document presented to you carefully. Check the VIN to see that it matches the one on the car. Next, check for any liens, alterations, erasures, or any sign of tampering.
If the vehicle shows a lien or lienholder, it’s not necessarily a bad thing, but it means there’s an outstanding loan on the vehicle. In such cases, ask for proof that the lien or loan has been paid off before finalizing the purchase.
What to Do if a Vehicle’s Title is Not Clean
If case you find out that a certain vehicle’s title is not clean, the following measures can be taken:
First, one may consider bargaining with the seller to account for the potential risks. If you cannot handle the risks of a branded car, you can opt for a different car altogether.
Before making a decision, make sure that you understand the implications of buying a vehicle with a branded title. If you can work with the implications, make the purchase; otherwise, walk away from the deal.
Legal Implications
Buying or selling a vehicle with a branded title can lead to legal complications. For example, title issues may arise if the seller fails to disclose the vehicle’s history or tries to hide salvage or rebuilt titles. This would result in disputes or financial losses for the buyer, which, depending on the state laws, may turn into a series of court hearings.
To avoid these, it’s best to place focus on purchasing a vehicle that has a clean title.
Can a Clean Title Car Have Issues?
While a clean title is a positive indicator, it does not guarantee that a vehicle is free from issues. Here are some possibilities of problems that may still exist in cars with clean titles:
- Undetected previous damage that was not reported
- Mechanical issues that arise over time
- Recalls that have not been addressed
- Wear and tear that affects performance
- Title washing, where a vehicle’s history is hidden through fraudulent means
These reasons make it necessary to carry out a VIN check with a reputable tool to verify the overall condition of a vehicle before agreeing to a purchase.
Conclusion
We can say overall, that a clean title shows that a vehicle has never been deemed a total loss by an insurance company and is in great condition. Vehicles with clean titles are seen to be much more valuable and desirable with little or no hidden records.
While this is generally true, getting a vehicle history report and even a mechanical inspection is also advisable before finalizing a purchase with a dealership. This protects you and makes sure you’re getting the best deal possible.
