Rebuilt cars are cheaper than other used vehicles. But it's buyer beware

Anyone looking for a deal on a second-hand car these days should be aware that high demand has created opportunities for sellers of rebuilt vehicles who may not disclose a car's history, auto industry professionals say.

Rebuilt vehicles are ones that have been put back together after severe damage from a collision or some other event like a hail storm or flood.

"What it means is that the vehicle would have been deemed a total loss by an insurance company at some point for some reason," said Stuart Klein, vice president of collision programs for the Automotive Industries Association of Canada.

When a vehicle is written off, it doesn't necessarily mean it's beyond repair, Klein told CBC Radio's Cost of Living, "but the value of repairing it exceeds what the value of the vehicle was prior to the damage."

After a car is written off, it's often sold to a salvage yard. It may be scrapped for parts, but it could also get auctioned to someone who fixes it up.

Dealerships have to disclose if a car has been rebuilt. But private sellers who list their vehicles for sale on platforms like Facebook Marketplace aren't required to do so.

Nancy Shadlock, who lives in Calgary, unwittingly bought a rebuilt vehicle back in 2021 when, at the end of a maternity leave, her family needed a second vehicle. A listing on Kijiji for a Nissan Cube caught her eye.

"It was a 2010, and I think it only had about 50,000 kilometres on it," said Shadlock, while other vehicles she saw had 150,000 or more. Plus, at $5,000, it was a steal, she said.

It was only when Shadlock went to register the vehicle that she learned about its rebuilt status. She said she was "a bit frustrated," but ultimately decided not to go back to the seller to complain.

If a buyer is lucky, a rebuilt vehicle could run perfectly well and pose no safety concerns. But Klein said the more complex technology of newer cars — particularly those from 2016 onward — means vehicle repairs have become a much trickier and more precise business.

"You've got those blind-spot detectors in your mirrors and things like that. Those are all very high-tech systems, and they have sensors and radars and cameras and so on," he said.

"And pretty much every system requires a recalibration after the vehicle's been in any sort of an accident."

If these aren't done correctly, he said, a car's assistive technology could put the brakes on for no reason if, for example, it misinterprets a telephone pole at the side of the road as an obstacle in front of the vehicle.

Not every insurance company is willing to insure rebuilt vehicles, Sherif Gemayel, an insurance industry expert in Calgary, told CBC in an email.

Some will offer liability only, and others may require inspections, repair records or appraisals before offering coverage, said Gemayel, who is also CEO of a company called Trufla Technology, which provides AI assistance for the insurance industry.

Professionally rebuilt vehicles with strong documentation are much easier to insure than those without, he said, and drivers are always obligated to disclose a vehicle's rebuilt status to their insurance provider.

WATCH | What's behind higher vehicle prices:

The average price of buying a car has increased by more than 40 per cent since 2018, and while pandemic-fueled supply chain issues were a major cause, the trend hasn’t stopped in recent years.

To understand why there's a buck to be made rebuilding totalled cars, it helps to take a look at what's happened to the price of used vehicles in recent years.

According to the most recent AutoTrader data, the average cost of a used vehicle in Canada is $36,713.

Though that number is actually down slightly — 0.3 per cent — compared to the same time last year, it's still a hefty increase over pre-pandemic price tags. The average cost of a used vehicle is up more than 48 per cent since December 2019 when it was $24,709.

While there's no one reliable repository of sales data for rebuilt cars, Martin Hausner, who owns the auto-financing company The Loan Store and a second-hand dealership in Edmonton, estimates they sell for 10 to 30 per cent less than equivalent second-hand vehicles.

The company CARFAX, which operates a database consumers can use to check a vehicle's history, said the portion of reports run for cars with rebuilt titles has increased from 0.9 per cent in 2015 to 1.3 per cent in 2025.

There could, however, be many more rebuilt cars out there for which no one runs a vehicle history.

Though Shadlock didn't set out to purchase a rebuilt car, she said her family will still buy privately going forward — she'll just check CARFAX first.

Incidentally, they had a good experience with their $5,000 rebuild.

"I basically gave it oil changes, changed the tires, and it ran wonderfully," she said.

Although its boxy shape meant it wasn't aerodynamic enough for highway driving, Shadlock said it was great for the city.

"You could fit into any parking space, but it felt big inside. ... I packed it full of kids and bikes and all kinds of crazy stuff."

Inflationary pressures also meant it held its value much more than has typically been expected for depreciating assets like cars.

"I sold it, like, four years later for $6,000."