What Does It Mean If A Car Has A Branded Title?

If you're planning to buy a used car, you might come across deals that seem too good to be true. If a car seems unexpectedly cheap, take a closer look at the title to see if it's "branded." A branded title can mean a lot of things. It doesn't necessarily mean you should walk away from the car, but it does mean you should go in with your eyes wide open.

In the United States, a vehicle's title is a legal document of ownership detailing important historical and legal information about the car. When a vehicle has a branded title, it means that it has experienced a significant event or condition that has impacted its value, safety, or overall integrity. These events are serious enough that the title is permanently marked to reflect its history.

There are dozens of different kinds of branded titles, and the names can vary slightly depending on which state you're in. We'll explain the five most common brands and look at what the risks are when buying a car with a branded title.

A salvage title is issued when a vehicle has been declared a total loss by an insurance company. This means the cost of repairs is more than the percentage of the car's value set by the insurers (usually 60% to 100%). If a vehicle currently holds a salvage title, then it's not fit to drive, and you should only purchase it if you're planning to rebuild or repair it to a standard that would pass a state safety inspection. If a car with a salvage title is repaired and passes a rigorous state inspection to verify that it's roadworthy again, it will be given a rebuilt title. Although the car may now work, the title lets buyers know that it has a troubled past, which may affect its reliability and value.

A water damage title applies in cases where a car has previously been flooded, usually in a storm. A car with this title may look and run fine, but water damage issues can be problematic. It can cause lasting issues with a car's electrical systems and engine components that aren't apparent until later on.

A lemon title means that the car had serious defects that couldn't be fixed, even after multiple repair attempts by the manufacturer. All states have versions of lemon laws, which means that if the manufacturer can't fix the problems with a new car, they are obligated to buy it back from the purchaser. The manufacturer may then choose to sell the car, but it bears a lemon title to alert potential purchasers of its defects. An odometer fraud title indicates that the vehicle's mileage has been fraudulently altered to display fewer miles than actually driven, misleading potential buyers about the vehicle's true usage and wear. ​

Branded title vehicles are generally priced significantly lower than comparable models with clean titles. However, some insurance companies may refuse to provide full coverage for branded title vehicles. Plus, you'll probably have to pay upfront, as it's difficult to get finance for a branded title vehicle. Lenders think they're too risky. There are also long-term safety and reliability concerns. 

Depending on the type of damage or issue the car experienced, there may be hidden or recurring problems that weren't completely fixed or that could get worse over time. For example, a car that suffered frame damage in an accident may pass inspection and appear fine at first, only to develop handling or alignment problems later. Electrical issues from flood damage may not show up for weeks or months after purchase.

Make sure you get a comprehensive vehicle history report from the National Motor Vehicle Title Information System (NMVTIS) or a reputable service like Carfax. Lastly, be aware of title washing. This is when sellers register a car in a state with looser reporting requirements so it appears to have a clean title when sold. It's a way of intentionally misleading buyers to make a vehicle appear more valuable than it really is, and it's illegal. If you believe you have been a victim of title washing, you should report it to the police.