Rebuilt Title Due to Repossession
What Is Repossession?
Repossession is a legal process in which a creditor takes back possession of a property that was used as collateral for a loan. In the case of a car loan, when a borrower fails to make payments, the lender has the right to repossess the car. The lender can then sell the car at an auction to recoup the losses. If the sale price does not cover the outstanding balance on the loan, the borrower may still be responsible for the remaining amount.
Can a Car be Deemed Total Loss Due to Repossession? Or Can It Have a Rebuilt Title Due To Repo?
Just the fact that the vehicle is repossessed does not mean it is a total loss because someone's falling behind thier car payments does not affect the vehicle's value, safety and does not incur repairs. The title of a repo vehicle should remain clear. Howerver, the repossession record with appear in its VIN history report.
A rebuilt title is issued instead of a salvage title when the vehicle is repaired and inpected at the station licensed by the State. There are 2 major reasons for a vehicle to be totaled and become salvaged: damage and theft, the latter because even recovered stolen vehicles may have hidden issues that occurred while they were handled by car thieves, such vehicles are no longer deemed reliable and safe.
What if a Repo Vehicle Has a Rebuilt Title?
In some cases, the car may be damaged during the repossession process or while in the lender's possession. If the cost of repairs exceeds the value of the car, it may be deemed a total loss by the insurance company, as it normally happens to damaged vehciles. However, this would be due to the damage sustained during repossession, not the repossession itself. That's an important difference to understand.
So if your are offered a vehicle with a rebuilt title and the seller insists it's due to repo run VIN check to find out about the actual cause of the title branding or just walk away.