Common to every car sold in the United States is a document called a title. It's just like a birth certificate or a criminal record for a person; it affirms existence, and, like a criminal record, it can tell anyone who reads it about a car's less than savory past.
Just like most people don't have a criminal record, most cars don't have a bad title. Some cars, however, do have what they call 'branded titles.' These are titles that have been marked, or branded, to reflect something important that should be disclosed to potential buyers and other parties with vested interest in the car (such as insurance companies).
Because titles follow the car, once a title is branded its final - there's no way to legally make a branded title revert to a standard or clean title.
There's multiple different types of branded titles, but the following list represents the five most common types of branded titles:
1. Salvage TitleGetting in a fender-bender is one thing, but a bona-fide accident is something else entirely. The level of damage sustained by a vehicle in a serious crash is usually enough to deem it a total loss by the standard of most insurance companies; this is especially true if the airbags deploy.
So what happens when your old ride gets deemed a loss? The insurance cuts you a check for the value of the car, the car gets towed to an impound lot owned by the insurance company, and soon enough it's sent to a salvage auction house specializing in cars that met an untimely end. During this chain of events the title reverts from a clean to a salvage title.
Here's where it can get interesting. Once that car goes to the auction, it's usually bought by the junkyards for cheap, which go on to strip and crush the car for scrap metal. But sometimes, if the damage doesn't look too serious, some enterprising auto body or shop might pick up the car for pennies, fix it up best they can, and try to resell it with a rebuilt title. A rebuilt title is issued when a car originally deemed as salvage is repaired and passes a state inspection.
If the seller is honest, they'll price it fair and disclose what work they did. In this instance you can pick up the car for cheap and potentially have a decent car for well below fair market value. Is it worth the savings?
For most people, no. In most instances, if a car is hit bad enough to earn a salvage title it might not drive like it did prior to the accident even after the repairs. There's also concerns of how extensive the damage really was and if the mechanics who revived the car were thorough in their repairs or instead looking for a quick flip. If the latter is the case there may be more problems down the road. And then there's the question of financing and insuring a salvage- or rebuilt-title car, which can be a difficult or even impossible task.
The takeaway from all this is that any car with a salvage title is a headache waiting to happen. If you come across one, it’s best to walk away, regardless of the price.
2. Lemon TitleWe like to think car companies have honed their manufacturing processes to absolute precision. New cars are perfect, right? Well, not always. Sometimes a car slips out of the factory with enough issues to suggest it was the last one built on a Friday afternoon shift. And by the time the buyer notices, they're already a couple payments in.
Defective cars used to be particularly rampant in the bad old days of quality control during the 1970s and 1980s. In response to multiple complaints of unhappy customers who had to suffer from shoddy products without recourse, the government introduced what's commonly known as the Lemon Law.
Essentially, the Lemon Law states that if a new car suffers problems severe enough that the manufacturer cannot repair it within a sufficient period of time, they are obligated to repurchase that car from the consumer. This 'substantial defect,' as the law phrases it, must occur within a defined period of time or number of miles and must not be caused by abuse.
Legal jargon being what it is, defining substantial defect can be difficult, but generally it refers to issues that make the car unsafe to operate - things like faulty steering, bakes, engine, transmission, and other big-ticket items. Poor fit and finish or a faulty power seat motor won't qualify. A bad paint job might, however.
If a car is to be deemed a lemon, the manufacturer has to try and unsuccessfully fix it at least once; if their fix works the first time, there's no grounds for a Lemon Law buyback.
When a car gets bought back due to the Lemon Law, the title will change to a lemon-branded title. Again, a car branded as such can be bought for a song - but there's a potential hornet's nest of problems awaiting a car that the original manufacturer couldn't fix after multiple attempts.
Lemon laws vary from state to state, so check with your state about their particular laws governing lemon cars.
3. Water Damage TitleThe number-one enemy of electronics is water - see what happens when you drop your phone in the pool. Cars happen to have a lot of electronics buried in them. They also have engines and transmissions which, besides their largely computer-controlled sensors and valves, also are vulnerable to water damage given enough water.
Of course, cars are designed to get wet. But they're not designed to get flooded. A car that is the victim of flooding has likely been submerged in multiple inches - maybe multiple feet - of water. Being inundated to that extent can wreak havoc on a car, causing anything from wonky electronics to ruined engines depending on how much water ended up in the car.
Cars deemed to have flood damage get bought back by the insurance company and are sent to the auction, where - usually - they end up fodder for the crusher. But sometimes people try to fix and flip a flood car. Just like cars with salvage titles, flood-titled cars are to be avoided.
4. Hail damage titleA car that's been heavily peppered and pockmarked by hail may be deemed a total loss by the insurance if the cost of bodywork and body panel repair exceeds the value.
A hail damage title is not a branding that is widespread across all the states, but those that do differentiate let buyers and rebuilders have a chance at a good deal. Hail damage is superficial, after all - if you can look past the acne-riddled hood, roof, and trunk, the car is completely usable.
If there's one branded-title car that is worth considering, it's the hail damage cars, because mechanically there shouldn't be any issues stemming from the incident which prompted a branded title.
5. Odometer DiscrepancySometimes the mileage displayed on the car’s odometer isn't representative of the true mileage on the car. This could be indicative of odometer fraud, but more commonly this occurs when the odometer is replaced with a new or used unit and the readout isn't adjusted to match what the car actually has for mileage.
When using Carfax or another vehicle history report, an odometer rollback warning might appear from the history records pulled up for that particular car. These warnings should be taken with a grain of salt - it's very plausible that when the car went in for repair the technician or service advisor accidentally entered the wrong mileage into the computer, which was then picked up by the report. It's worth doing due diligence to investigate and see if this is the case.
As for actual odometer tampering, that's a tough feat to do these days, with the complexity of the digital odometers found in today's cars. The most likely cause for an odometer rollback title is the replacement odometer, but as always, do your homework and try to figure out what the story is behind the vehicle’s branded title.
Title WashingBecause title brands are so repulsive to shoppers - essentially making a branded car just about impossible to sell - some unscrupulous sellers resort to a scam called title washing. The goal is to try and fraudulently eliminate the brand and make the car appear to have a clean title.
A common way to go about this is by taking advantage of the varying titling rules across the different states. Some are stricter and some are more lenient when it comes to titling vehicles, and not all recognize the same brands. If you take a car with a title brand from a stricter state to a more lenient one, it’s possible to have a new title issued that makes no mention of the brand. It then would appear to shoppers as a clean-titled car.
Another method is actual tampering of the physical title document. It’s why it is always a good idea to take a look at the title in person, rather than just take the seller’s word the title is clean. Seeing the title also proves the seller has the title to begin with. No title at all can also prove to be a serious roadblock in many states when it comes time to register the car with the DMV.
The best way to avoid a title washing scam is to get a vehicle history report. These reports disclose past history of a car regardless of the current title status. If a car that was once branded now sports a clean title, the reports will disclose this. The cost of an Autocheck or Carfax report is well worth the peace of mind that comes with a complete vehicle history.
The Bottom LineWhenever you’re shopping for a used car, you want to buy the nicest example you can find - and it’s rare when the nicest example out there is saddled with a branded title. A title brand is a black mark on any car, telling the world in clear terms that the car in question has been through some sort of major, condition-altering event. It’s always better to buy a car with a clean title if you can, regardless of the cost savings.
To make sure the car you want has a clean title, always be sure to get a vehicle history report and also ask to see the vehicle’s title. If the seller agrees, you’ll know that not only does the car have a clean title, but also that it has a title to begin with. If the seller lost the title or otherwise doesn’t have it, the resulting hoops you may need to jump through in order to register the car can be a nightmare for both buyers and sellers.
With 40 million used cars bought and sold each year, there’s no reason to settle for a branded vehicle. If you come across any branded title vehicles, keep looking - the right car with a clean title is out there.
If you’re ready to take to the web for your own car buying process, you can search over 4 million new and used cars with iSeeCars’ award-winning car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars VIN check report. You can also filter by title, ensuring the cars you find have not been salvaged, flooded, or junked.