Watch Out for Hidden Flood Damage in That Used Car

Auto Loans
Beware of Buying a Flood-Damaged Car

Hurricane Harvey is likely to unleash a flood of water-damaged vehicles into the used-car market, and potential buyers must be aware of the dangers they pose.

It’s estimated that more than half a million vehicles will be affected by the devastating storm that hit the Houston area — even more than during Hurricane Sandy in 2012 — and insurers are standing by to begin handling claims.

Title washing hides history of damage

Many damaged cars will likely be considered totaled — declared a total loss by the insurer — and issued a salvage title. This serves as a warning to future buyers that the car was severely damaged. Depending on the level of damage, such a car is either scrapped or resold at a much lower price.

However, unethical dealers and other sellers may hastily refurbish damaged cars, move them to another state and give them a new identity in a process called “title washing.” Using various means, these sellers remove the salvage title and hide the car’s history of severe damage.

Buyers who purchase these cars with what appears to be a clean title have little recourse, according to the National Insurance Crime Bureau. “These scam artists rarely use legitimate identifying and contact information,” according to the nonprofit organization’s website. “In many cases, buyers are left with a useless vehicle and a loan that they still must repay.”

Used-car buyers must look out for potential scams and know how to spot a flood-damaged vehicle.

What buyers should look for

A waterlogged car can appear fine at a glance and even drive normally for a short time. But because the car sat in the water, moisture will have corroded its electrical system. That’s expensive — and sometimes impossible — to fix. Even worse, water damage can cause electric safety systems to malfunction.

The good news is that when you’re buying a used car, it’s not hard to detect flood damage if you know what to look for:

  • Check the vehicle history report. Used car dealers often provide vehicle history reports for free. The report will show you if the car has a salvage title, among other things. If the dealer doesn’t offer a vehicle history report, ask for it and check the date to make sure it’s current. The report will also show if the car was ever registered in a Gulf Coast state or if it has been registered recently in different states, both of which are warning signals.
  • Sniff out problems. Many flooded cars sit in water for days. While the upholstery and floor covering can be dried out and cleaned, it’s hard to get rid of the musty smell completely. Beware of any car with a strong smell of air freshener, which the seller might use to try to mask this problem.
  • Look for rust and dirt. Inspect the metal frame and suspension parts for unusual rusting or metal flakes. Another telltale sign is dirt or evidence of silt that has been washed into areas under the hood.
  • Check the headlights. It’s tough to get water out of partially sealed-off areas such as headlight and taillight assemblies. Look for fogging or discoloration in the clear plastic lens.
  • Watch for new flooring and insulation. If the car isn’t new but the flooring is, it could have been replaced to disguise a flooded car. Also look for mismatched floor mats or sections that might have been patched. Lift up the carpeting in the trunk and look at the underside for discoloration or stains.
  • Be suspicious of underpriced cars. If a dealer is selling a nearly new car at a bargain price, there could be a reason. Instead of jumping on what looks like a good deal, use a pricing guide such as Edmunds.com or Kelley Blue Book to see the current market value of the car. If the sale price is thousands less than it should be, find out why.

Hiring a mechanic to inspect a used car before you pop for it is always money well spent. But since this will cost you about $100, do your own pre-inspection first. Once the car passes muster with you, let an expert take a closer look. A mechanic will know how to spot water damage and other serious problems.

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