Can I Get an Auto Loan for a Car With a Salvaged Title?

When shopping for a used car, you may come across some with salvaged titles. And while we would normally recommend avoiding these branded vehicles, there’s no doubt that their low price tags can make them attractive to many budget-minded buyers. But what if those buyers can’t afford them? Can you finance a car with a salvaged title?

Financing a car with a salvaged title

A used car sales dealership in Ridgewood, Queens, New York City
A used car sales dealership | Pablo Monsalve/VIEWpress via Getty Images

RELATED: Are Finance Products for Your Car Worth It?

The short answer is yes, you can finance a car with a branded title. For the uninformed,  a salvaged title car is one that requires a significant amount of repairs to the point that the insurance company has written it off as not worth the cost to repair it. Cars can not only be salvaged due to accidents, but also from theft, vandalism, and flooding.

Although an insurance company may brand a car with a salvage title, it can still be repaired, inspected, and then given a “rebuilt” title. With a rebuilt title, the prospective buyer may have a better chance at obtaining a loan, since the car will be deemed safer to drive at that point. However, finding a lender to finance the car could be a little tricky.

Finding an auto loan for a car with a rebuilt title

The most overpriced used car in each state
View of a used car dealership in New York | Pablo Monsalve/VIEWpress via Getty Images

Obtaining an auto loan for a rebuilt car is not too unlike finding one for a clean-titled car, however, you may have to look a little harder. The Balance recommends approaching your personal bank first, especially if you have already had an auto loan through it. In that case, your bank or credit union may be more likely to grant you a loan for a rebuilt car because you already have a relationship with them. Of course, your current credit score, history, and down payment could play a factor.

If you don’t have a good-standing relationship with your bank or have never financed a car, then finding a loan for a rebuilt title car can be somewhat tough – but it’s not impossible. Rebuilt cars are typically seen as high-risk vehicles since they have been rebuilt, but aren’t typically back to their original standards. When looking for a loan, you can always check online for any second or third-tier lenders that will finance a car with a rebuilt title. If you do find a loan, then just be warned that it could come with a really high-interest rate since many banks consider rebuilt cars a risk.  

Bring the necessary documents to get a loan

A used car salesperson helps out customers.
A used car salesperson helps out customers. | Helen H. Richardson/The Denver Post

If you end up finding a lender that will write up a loan for your rebuilt car, then it’s a good idea to bring as much documentation as possible. This can include a mechanic’s statement showing that the car is roadworthy in addition to a statement from your insurance carrier. Chances are if your insurance company will cover the rebuilt car, then you’ll be able to obtain a loan for it as well.

Of course, a valid driver’s license, bank statements or pay stubs, and a good credit score will help as well. However, if you don’t have any established credit or are in a bad credit situation, then having a co-signer is a good idea. Ultimately, getting a car loan for a car with a salvaged or rebuilt title is possible, but it could take a little more effort.

RELATED: How to Finance an Exotic Car