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Millions of used cars are sold every year, and not all of them come with a perfect history. If you're in the market for a used car, how do you protect yourself from buying a lemon?
You can start by checking the car's title to see if it's branded. A branded title means a car has had significant issues or major damage that is more than the car is worth. Here's what you need to know about how a branded title works and how you can use the information they provide to determine if a car is a good buy or a bad deal.
What Is a Branded Title?
A branded title is a car title that's been marked—or "branded"—with a designation that the vehicle has sustained damage or other issues that affect its condition. The purpose of this title is to give more insight into the car's past. A car could have been in an accident, stolen, vandalized or damaged by fire or flood. These are some things buyers need to know about before making a purchase.
For this reason, states issue different types of car titles to provide more detailed information about a vehicle's history and condition.
Here are some of the most common types of branded titles:
- Lemon law title brand: Every state has lemon laws to protect you if you buy a car with major defects. If the manufacturer can't fix the issue within a reasonable amount of time, they have to either replace the car or give you a refund. If a car is returned under lemon laws, the title will receive a lemon title brand, which you can see on the vehicle history report or the title itself.
- Odometer tampering brand: Imagine buying what you think is a low-mileage car only to discover later its mileage is substantially higher. That can happen when an unethical car seller rolls back the odometer to boost the car's value. If tampering is proven, the car can get an odometer rollback brand on its title, which lets you know the stated mileage can't be trusted.
- Salvage title brand: If a car has a salvage title, it means it was in a bad accident and the insurance company declared it a total loss. Some insurers "total" a car once the costs of repair and salvage value are more than the car's actual cash value. Other providers declare a vehicle a total loss and assign a salvage title when costs exceed a specific percentage of the car's worth, usually between 60% and 100%. You can save money buying a car with a salvage title, but you won't get much for it when you sell.
- Rebuilt title brand: A rebuilt title brand can be designated when a salvage vehicle is repaired properly and passes a state safety inspection. The rebuilt brand lets you and other prospective buyers know the vehicle was previously damaged and might still have body or mechanical issues.
- Water damage brand: Flooding can damage a car's interior and engine. Often, damages can take time after the flood to manifest. That's something to consider if you come across a car with a water damage title brand, as you could run into problems later.
Branded Title vs. Salvage Title
A salvage title is a type of branded title, but it has specific characteristics that set it apart. Let's take a look at how branded titles differ from salvage titles:
| Branded Title | Salvage Title | |
|---|---|---|
| What it means | Shows history of damage or issues | Indicates severe damage or total loss from events like collision, flood, fire, hail, vandalism or theft |
| Why it's assigned | Significant damage like accidents, floods and the like | Repair costs exceed a set percentage of the car's fair market value |
| How it's assigned | Assigned by states | Assigned by the state when the insurance company declares the car a total loss |
| Risks |
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Pros and Cons of a Branded Title
Buying a car with a branded title may help you save money, but these cars pose risks you must consider first.
Pros
- Cheaper to buy: You can typically buy a used car with a branded title for less than one with a clean title. This is especially true with cars that have salvage titles. Kelley Blue Book estimates that salvage title cars can cost 20% to 40% less than their clean-title value.
- Get more for your money: A branded title could help you afford upper-end vehicles or features typically outside your price range. For example, you might pick up a luxury vehicle with leather seats and premium sound when it might've otherwise been out of reach with a clean title.
- Ideal for DIYers: If you're a mechanic or simply like to work on cars, a branded title vehicle with more minor issues could help you save money if you don't mind doing the repairs yourself.
Cons
- Harder to get insurance: Finding an insurer for a branded vehicle could be difficult, especially if the car has been in a serious accident. If the insurance company believes the car's structural integrity isn't as strong as before the accident, they may deny coverage.
- Branded designation is permanent: Once a title is branded as having major damage or issues, the designation is permanent, even if the car is repaired and passes inspection. Be aware, however, that dishonest car owners can move a vehicle to a state with more lenient title laws to remove or hide its branded title—a practice known as "title washing."
- Lower resale value: Snagging a lower price on a used car is nice, but the same holds true when you're ready to sell—it won't sell for as much as a clean-title car. These vehicles are usually harder to sell because buyers are understandably wary of the potential risks.
- Limited financing options: Cars with branded titles—especially those with salvage or rebuilt titles—are more likely to have durability concerns. Chief among them, for lenders, is that the vehicle won't last as long as the auto loan. Consequently, risk-averse auto lenders are less likely to finance a car with a salvage title or they may require a larger down payment or higher interest rate.
How to Insure a Car With a Branded Title
Insuring a vehicle with a branded title can be challenging for a few reasons. It's hard for insurers to determine the true value of a car with a rebuilt salvage title because of its history. If you get into an accident, they might have trouble telling the new damage from that of a prior incident. As a result, many insurers may offer liability insurance, but not comprehensive and collision coverages on cars with a rebuilt or salvage title.
Fortunately, it is possible to insure a car with a branded title, but you may have to take a few extra steps. If the car has a salvage title, it must pass a mandatory state inspection. This step is required to convert the title to a rebuilt title so you can legally drive the car on the road. Additionally, your car insurer will likely require a certified mechanic's statement and current photos to verify the car is in good working condition. Be prepared to provide the original repair estimate too, so they can see everything was fixed correctly.
Should You Get a Branded Title Car?
Getting a car with a branded title may be wise if it helps you save a lot of money. It might also make sense if you enjoy repairing cars or want a more affordable way to get a top-tier model with premium features.
On the other hand, the risks of a branded title car may be too much to make it worthwhile. The likelihood of encountering structural or mechanical problems down the road is greater with a branded title car, and finding affordable financing or insurance isn't easy. Plus, selling it later will be harder, and you'll probably get less money than you would for a clean-title car.
If a branded title car feels too risky for you, there are other ways you can find an affordable used car.
Start by doing your homework and getting a feel for local prices on Facebook Marketplace, and check Kelley Blue Book or Edmunds for market values. You can also save money by purchasing a high-mileage vehicle that may still run reliably for years if you take good care of it. Finally, timing your purchase at the end of the month or year can also help you get a good deal if the dealership is trying to meet sales quotas or clear out inventory.
The bottom line
Buying a car with a branded title could save you money, but you must understand the potential risks involved. Before you buy, review the vehicle's history report and have a mechanic you trust inspect the vehicle.
Whether you're looking to buy a car with a salvage title or a clean one, you can find out its history by using AutoCheck by Experian. Enter the vehicle identification number (VIN) or the license plate number to access a report detailing past accidents, flood or fire damage and other information.