Title washing should be a serious concern for anyone in the business of buying and selling used cars.
I don’t want to freak you out here because it is fairly easy to avoid, but you still need to be aware so you don’t buy a car with a washed title.
The problem with title washing goes something like this…
Lets say Florida (or plug in whatever area you want that gets scary weather) gets nailed by a big gnarly hurricane. What happens is that there will now be hundreds or even thousands of cars that get flooded to the point of being inoperable…or almost inoperable.
The owners of those cars will make a claim to their insurance company and the insurance companies will “total” those cars and cash out the owners or pay off the car loans.
And all kinds of cars get “totaled” by insurance companies after floods too. Old cars, nice used cars with low miles…and even brand new cars and trucks by the hundreds!
“New cars? Huh?”
Sure, go to any sizable city where there are blocks and blocks of new car dealerships and guess what happens to those cars when they get flooded by the hundreds? Well, they get totaled too! Yup, we are talking about hundreds of cars that look brand new with zero miles…and a lowly salvage title.
In case you don’t know what a salvage title is…
A salvage title is what the DMV issues a car after its been considered to be totaled by the insurance companies.
And what does “totaled” mean?
Cars are totaled for lots of reasons like being in a bad wreck, flooding, etc., but the bottom line is that a vehicle is declared “totaled” by the insurance company because the damage to it is so extensive that it would cost more than the vehicle is worth to repair it.
But why would an insurance company total a flood damaged car that was a new car?
Because flood damaged cars will be chronically plagued with problems like mold and faulty electrical systems. The scary part is that many of those electrical problems won’t manifest until much later because it takes time for the water (often salt water) to works its way through the car and corrode and eat everything in its path like an early version of Pacman.
So what happens to all those “totaled” cars?
The insurance companies have to unload them somehow, right? Well, they dump them cheap at used car auctions. No problem with title washing so far, right? Nope not yet, but this is where the cockroaches come scurrying out from their slimy hiding places…
Read Part 2 of How To The Avoid Title Washing Scam >>
