• May 3rd 2010 at 12:00AM
  • 69
Used car buyers could be in for an unwelcome surprise i... Used car buyers could be in for an unwelcome surprise if they unknowingly purchase a salvaged vehicle. (The Consumerist, Flickr)

There's no greater shock than buying a used vehicle and later discovering that it's a rebuilt wreck. Talk about buyer's remorse! If you've paid retail price for a used vehicle, discovering a salvage title history can be devastatingly costly when you try and resell it. Other consequences can be even more harmful, as rebuilt cars are liable to have serious safety defects.

Clearly, this sort of fraud is one of the biggest pitfalls in used car shopping. But by educating yourself and applying a few basic principles of smart car shopping, you should be able to protect yourself. As a consumer, knowledge is power. So it's important to understand what a salvage title is, how the title washing process works, and how one of these vehicles can eventually be offered for sale.

The Salvage Title

Laws vary from state to state, but salvage titles are generally issued to a vehicle that is extensively damaged, usually from 70% to 90% of its retail value. This damage can be caused by almost anything -- a devastating accident, a flood, vandalism, or fire. Insurance companies will then designate the vehicle "totaled," take possession of it, and the state then issues a salvage title.

At this point, the car is usually sent to an auction so the insurance company can retrieve some of the money from the loss. Some buyers at these auctions are interested in using these totaled vehicles strictly for parts. Used auto parts is big business, and these companies will typically disassemble the car and sell undamaged parts, recycling what's left of the "car-cass." Others buyers are reputable vehicle rebuilders who will fix a totaled car so that it can meets state inspection and safety laws and then resell the once-wrecked vehicle with a full disclosure. In this case, a buyer usually enters into the deal knowing exactly what was done to repair the vehicle. You might ask why a person would buy a vehicle with a salvage history? One word: Money. Salvage-titled vehicles are worth significantly less, so carry lower prices.

<a data-cke-saved-href="http://autos.aol.com/used/" href="http://autos.aol.com/used/" _blank"=""> <img data-cke-saved-src="http://o.aolcdn.com/os/autos/photos/manufacturers/ford/20100426_used-ford-escape_225mz" src="http://o.aolcdn.com/os/autos/photos/manufacturers/ford/20100426_used-ford-escape_225mz"> </a> <p><a data-cke-saved-href="http://autos.aol.com/used/" href="http://autos.aol.com/used/" target="_blank">Search AOL Autos Used Car Listings</a> </p></div></div> <p>Unfortunately, unscrupulous rebuilders also get their hands on these vehicles. Their con is to buy the damaged cars and rebuild them to operating condition as cheaply as possible. They then put them through a process called "title washing," used to remove any indication of the salvage history from the title. </p> <p style="font-weight: bold;">Title Washing</p> <p>The title of your car is the way you record your ownership with the state. But states have different procedures and requirements for issuing titles, so an unscrupulous seller can sometimes re-register a vehicle in a different state in ways that cause the salvage history to disappear. So "title washing" activity occurs more frequently in areas where a few states border one another in a relatively small area, simply because of the geographic convenience. Once the title is "clean," a seller can sell the vehicle to an unsuspecting buyer at a much larger profit. </p> <p>But more often after a title has been cleaned, vehicles are fed into a national auction circuit and transported across the country to be sold far from where they originated. This means there is little chance for local authorities to catch up to the thieves. Worse yet, is that the unsuspecting buyer at these auctions is likely to be a dealer, perhaps even an honest one. Once the formerly salvage-titled vehicle has changed hands in this way, it can be even harder to identify.</p> <p style="font-weight: bold;">Protect Yourself</p> <p>The first rule of buying any used car is to always have a pre-purchase inspection performed before <a class="injectedLinkmain" data-cke-saved-href="http://autos.aol.com/used/" href="http://autos.aol.com/used/">buying a used car</a>. A trained eye can pick out the telltale signs of major repair: paint overspray, frame damage, water damage, and sloppy repair work. Spending a hundred dollars for an inspection up front can save you a ton of money down the road.</p> <p>One of the most serious conditions to try and spot is water damage. Cars that have been flooded -- like many during Hurricane Katrina -- can develop corrosion in places cars have no business rusting. This can lead to structural problems that pose a real safety threat if you're involved in an accident. </p> <p>But water damage should be fairly easy to spot. Look for water stains in the engine compartment, trunk, and doorjambs. Check electrical connections for excessive corrosion, which usually takes the form of a green, crusty substance in the electrical plugs and junction blocks (those little plastic boxes that have wires sticking out). Look at the seat mounting bolts on the floorboards -- are they rusty? If so, it might indicate the vehicle was underwater. Check the carpet for proper fit. If it's loose or wrinkled, it's possible that the carpet was removed to repair water damage. Check the oil, power steering fluid, transmission fluid, and differential fluid for a milky color or emulsification, as this can be caused by water mixing with these fluids. Reach up under the dash and seats to check for mud, dirt or silt. The only way it can get into these areas is if the vehicle was submerged in dirty floodwater.</p> <p>Check the doorjambs and body panels for paint overspray. Often when a vehicle is hastily put back together, the painter does not mask areas close to the replacement parts. In such cases the paint overspray is often evident. Check for frame and structural damage that has been sloppily repaired. Mismatching body panels and parts, mismatching paint, and misaligned glass could also be indications of a rebuilt wreck. </p> <p>Odometer tampering is another common ruse. Look at the odometer housing closely for smudging or misalignment. This could indicate that the odometer has been removed, reset, and reinstalled in the dash. Unfortunately, this practice is still widespread; just because odometers are no longer analog doesn't mean they don't get altered. So it's important to make sure that the condition of wear items match the numbers on the odometer. For instance, a car with only 10,000 miles showing should not have bald <a class="injectedLinkmain" data-cke-saved-href="http://www.autoblog.com/info/tires/" href="http://www.autoblog.com/info/tires/">tires</a> or worn-down rubber on the accelerator pedal.</p> <p>Sometimes you can spot conflicts with the sort of equipment installed -- or not installed, as the case may be -- on a used car. Make sure you do the research on the model you're shopping and if that it's supposed to have a specific type of engine or certain standard equipment and that's not the case, find out why, as disparities are indicators that the vehicle could have been rebuilt. For instance, the previous generation of <a data-cke-saved-href="http://www.autoblog.com/buy/Chrysler-Town_Country-2010/overview/" href="http://www.autoblog.com/buy/Chrysler-Town_Country-2010/overview/">Chrysler Town & Country minivans</a> came with both 3.3-L and 3.8-L V6 engines. But if you're looking at a top-of-the-line Limited model, it had best have the bigger engine in it!</p> <p>This brings up the point that you should always check the VIN (Vehicle Identification Number) closely to make sure the numbers on the title and the ID tag at the base of the windshield match. (There should also be a secondary label on the driver's door.) Any differences could be an indication that the vehicle was stolen and given a new VIN, or was devastated in a wreck and rebuilt. This can be common with unscrupulous rebuilders, who "part" cars together like Dr. Frankenstein. It's also worth doing a bit of research to understand what the numbers in the VIN mean. Different car companies have different codes for their VINS, but you should always be able to tell what year and assembly plant a vehicle came from, and more often than not, what engine should be installed in the vehicle. </p> <p style="font-weight: bold;">The Good News</p> <p>While conducting this sort of due diligence can seem overwhelming, there are services that can help you with the process. Perhaps the best known is a company called Carfax. It compiles VIN numbers from insurance companies, <a class="injectedLinkmain" data-cke-saved-href="http://www.autoblog.com/2009/10/22/dmv/" href="http://www.autoblog.com/2009/10/22/dmv/">DMVs</a>, other government agencies, repair facilities, rental companies, dealers, <a class="injectedLinkmain" data-cke-saved-href="http://autos.aol.com/extended-warranty/" href="http://autos.aol.com/extended-warranty/">warranty</a> companies, and vehicle auctions in both the U.S. and Canada. Carfax uses these records to provide information on the title history of cars for a fee. </p> <p>While Carfax does not have the complete history of every vehicle, it does have a database of over six billion records. Some car dealerships are offering Carfax reports on the vehicles they sell. Make sure you're looking at a recent report, or obtain the report yourself from the <a data-cke-saved-href="http://www.carfax.com/cfm/general_check.cfm?partner=RON_0%20" href="http://www.carfax.com/cfm/general_check.cfm?partner=RON_0%20" target="_blank">Carfax Web site</a>. A single report costs $34.99, or you can run five VINs for $44.95. It's as good a place as any to start the process of investigating the title and protecting yourself from salvage title fraud.</p> <div class="enhancement alignment-left fragmentId-22960 payloadId-80522 contentType-HTML"><br><a data-cke-saved-name="fb_share" name="fb_share" type="button_count" data-cke-saved-href="ShareShareSharehttp://www.facebook.com/sharer.php" href="ShareShareSharehttp://www.facebook.com/sharer.php">Share</a><!--{cke_protected}%3Cscript%20src%3D%22http%3A%2F%2Fstatic.ak.fbcdn.net%2Fconnect.php%2Fjs%2FFB.Share%22%20type%3D%22text%2Fjavascript%22%3E%3C%2Fscript%3E--><br><br></div> <p></p>

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    • 1 Second Ago
      • 8 Months Ago
      Auto Advantage of Asheville North Carolina sold me a truck that was exactly what the article describes... a fixed up flood vehicle shipped through several states to obscure the paperwork. I checked for a car-fax report and there was none ... Not only did they sell me a flood vehicle but they pushed the extended warranty on me and then at the first sign of a problem... "A transmission and trasfer case rebuild - being part of the drive train the insurance company was supposed to cover" But what did they do... the insurance company who was in the preverbial bed with the car company, dropped my claim stating the vehicle was a "flood vehicle" and I did not qualify for their insurance policy... Not to mention I never got a penny of the extended warranty $ back ... the car dealer saying I had to deal with the insurance company and the insurance company stating that I had to deal with the car dealer... so heads up... all the used car salesmen and women at Auto Advantage of Asheville are nothing but crooks and they use insurance companies that are just as crooked to make an extra couple of thousand off the deal...
      • 8 Months Ago
      I cannot believe the stigma that both car dealers and salvage title cars are branded with.As far as a dealer misleading you, let me tell you this, I have been on both sides of the desk and i am astounded at the amount of misinformation that the customer is more than willing to supply inorder to strike the best deal they can. If their lips are moving its nearly certain that there lying about either their financing ability, the history of their trade, or what they can buy another similar car for. And car salesman are the liars? In regard to cars with salvage cars, no dealer wants to assume the risk of a salvage car without proper disclosure. The people who do repair salvage cars are extremely selective about the vehicles that they rebuild. The craftsman *********** these cars are often the same people who build them in factories when they are new. All cars are built using raw materials and technology why not save the overinflated prices of brand new. Flood cars are a different story, but i search e bays salvage autos page weekly looking for my next nearly new car.
      • 8 Months Ago
      I have bought many salvaged cars. Insurance companies declare cars totaled when they really could be fixed. A door wrinkeled, a fender smashed. When people get into a wreck and have their cars repaired by the insurance company the damage does not go on the title. So many times there is not much difference between what a salvage rebuilder does and what a body shop does. The author of the article has not had much experience in the salvage field and so is quick to condem salvage vehicles. The word prejudice means quite literally to pre judge. Cars that are rebuilt can be sold for a considerable savings to the buyer, enough in many cases to make up for the resale value. I world recommend the writers stick to subjects they fully understand. Erik
      • 8 Months Ago
      There are many, many winning tactics you can use when you want to buy a car and not get taken. Not just the ones talked about in his article. For example, a very hard-sell car dealer in Las Vegas and I used 33 tactics (mostly dirty tricks) on each other when I tried to buy a car there. I used a hidden tape-recorder, and you can read the entire dialog in chapter 1 of my book, 365 Powerful Ways to Influence. You can download that chapter, free of charge, by going to www.donaldhendon.com. Let me know which tactics work the best for you. I am at don_hendon@yahoo.com.
      • 8 Months Ago
      this is a joke yes there are still people that try to do this but most states have tough laws now and have pictures of wrecks also every body part has vin number stickers so when its totaled it has togo back through state highway patrol with reciepts of used parts and their specific parts vin number as well what happens is two owners down the road doesnt tell new owner that is was previosly salvage non -highway and rebuilt and reinspected then a wreck happens and say the car just has air bag covers there goes the lawsuits, i have sold around over 300 salvage title vehicles some still wrecked some i fixed up and drove for a while then sold and never had any problems but i am honest and that is the one factor that comes into play greed for the money but what comes around goes around i have many horror stories
      • 8 Months Ago
      This is a very good story for people to read before they buy a used car!
      • 8 Months Ago
      Most of "REBUILT" cars are good cars, if they get fixed the right way, it could be only a fender and a headlight, or it can be a radiator support and a pair of air bags with a module, it also can be worse when it gets to the main chassis. Best deals are Theft recovery cars. I know insurances very well, I also know the prices of the Body shops that works for the insurances, Most cases insurances prefer to totaled a car than having the Body shops even mess with them. Because they give them a quote for example $3750 now, but later on they going to find alot more things! Trust me! they will find those things even if they don't exist! so they going to end up paying over $6000 on a car that was worth $7000 to begin with. My personal experience, don't trust car fax 100% (but is worth using it) lots of what big dealers call "Certified cars" they could also be involved in a previews wreck (I have seen 2008 Mercedes previously wreck pretty bad and they will call them Certified") Is worth paying the extra money to have a full inspection in a car that is worth more than $6000 in my personal opinion. Good luck! bzgacr@aol.com
      • 8 Months Ago
      Washing titles have been going on for years. The Insurance companies and major car dealers are all in cahoots with each other. There are 27 States currently being investigated by the AG's Office and very soon, all these people involved will end up in the big house. Just wait for a few more weeks and you'll all see it on the news!
      • 8 Months Ago
      I bought my used car from the owner (third owner, as it turns out), and yes, it turned out to be a rebuilt salvage. He didn't bother to tell me. However, I got a gem! It had 22,000 miles on it. I've put more than 85,000 MORE. Yes, I got lucky! LOVE my car! Just know, not ALL rebuilt salvage cars are bad.
      • 8 Months Ago
      My wife and I purchased a salvage Infinity g35X 2008 fully loaded and only 3, 000 miles on it at a fraction of the new price.. The dealer only sells salvages and is upfront about why the car was salvaged. In our case, it was a theft recovery...the car is a Gem and gorgeous.....I would do it gain with the same dealer because that is his tyoe of car business.......and he sells a lot of cars...top of the lione cars mostly.
      • 8 Months Ago
      carfax sucks, I was in process of buying a car, decided to go with carfax..before I bought car I pulled up carpet in trunk and seen major paint differences. took car to mechanic only to find car had been in serious accident, car was junk...Then to check out carfax out I put 2 of my own vehicles thru carfax, knowing both cars were in serious accidents, both cars came back with clean titles..I called and complained , but as usual they won this fight, but they did not win the war..I tell everyone I know about them.
      • 8 Months Ago
      CarFax is an OK service by remember that car dealers know how to launder titles to fool CarFax. Spend the money to hire an independent mechanic, that could save you thousands.
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