Consumer Car Buying Advice Blog

With credit challenged car buyers being especially susceptible to buying used cars with title issues the aftermath of Hurricane Sandy presents special problems

What we know

It has been shown that car buyers with credit issues are especially in danger of being taken advantage of in terms of buying used cars with hidden damage.

We are aware of this situation here at Auto Credit Express where, for the past twenty years, we’ve been helping people with damaged credit find dealers for their best chance at approved auto loans.

Used cars

Once they’ve received a car loan approval, most people who have experienced credit difficulties will choose a used car. They’re typically more affordable than new cars (according to Consumer Reports, new cars can lose up to 47 percent of their value in the first three years) and, considering the high quality of modern vehicles, it’s also a smart choice.

But buying a used car also carries with it the risk that the vehicle you’ll be financing isn’t what the seller states it is. In fact, a recent Experian Automotive study revealed that “more than 2 percent of the late-model used vehicles (model year 2005 and newer) had a negative vehicle history event (frame damage, salvage, odometer rollback, etc.), which can significantly impact the vehicle’s value.”

The report also concluded that buyers with low FICO scores are even more at risk noting that “more than 3 percent of financing outside of prime had negative vehicle history” which means.

Hurricane Sandy

Since this “negative vehicle history” includes flood damage, used car shoppers who plan on buying in the upcoming months need to be extra cautious, as vehicles that were damaged when Hurricane Sandy slammed in to the east coast. A recent article from NBC News went so far as to state that “Sandy might send more than 250,000 cars to the scrap heap.”

According to Edmunds.com, this is what can happen next:

“When the flood waters recede, they often leave behind damaged cars, and that’s where trouble can begin for used car buyers. After the owners of damaged cars settle up with their insurance companies, vehicles are sometimes refurbished and resold. And sometimes, a middleman buyer intentionally hides a car’s history as a flood-damaged vehicle through a process known as ‘title washing’ and sells it to an unsuspecting buyer in a state unaffected by the disaster. Electrical and mechanical problems then surface later — long after the seller is gone — leaving the new owner with an unreliable car and no recourse against the seller.”

What you can do

So what can used car buyers do, especially those with less than perfect credit, to prevent buying a vehicle that’s suffered flood damage?

The first step is to do a little investigation on your own. Here are some tips from NADA that should help:

1. Be alert to unusual odors. Musty or moldy odors inside the car are a sign of mildew buildup from prolonged exposure to water. It might be coming from an area the seller is unable to completely clean. Beware of a strong air freshener or cleaning solution scent, as it may indicate the seller is trying to cover up something. Run the air-conditioner to see if a moldy smell comes from the vents.

2. Look for discolored carpeting. Large stains or differences in color between lower and upper upholstery sections may indicate that standing water was in the vehicle. A used car with brand-new upholstery is also a warning sign, as a seller may have tried to remove the flood-damaged upholstery altogether.

3. Examine the exterior for water buildup. This may include fogging inside headlamps or taillights and damp or muddy areas where water naturally pools, such as overhangs inside the wheel wells. A water line might be noticeable in the engine compartment or the trunk to show that the car sat in standing water.

4. Inspect the undercarriage. Look for evidence of rust and flaking metal that would not normally be associated with late-model vehicles.

5. Be suspicious of dirt buildup in unusual areas. These include areas such as around the seat tracks or the upper carpeting under the glove compartment. Have an independent mechanic look for caked mud or grit in alternator crevices, behind wiring harnesses and around the small recesses of starter motors, power steering pumps and relays.

Secondly, visit the National Insurance Crime Bureau web site at https://www.nicb.org where, at no charge, you can enter the VIN number of the vehicle to see if it has been reported as a stolen or salvage vehicle.

If the report is clean, the next step would be order a vehicle history report from either Carfax or AutoCheck (Experian).

Finally, if the used car you’re really interested in has passed all the previous tests, have it inspected by an ASE Certified Master Mechanic as well as a body and frame specialist. This can cost anywhere from $100 to $200, but consider it money well spent as it could end up saving you thousands of dollars in repair bills if the vehicle in questions turns out to have hidden damage of any kind.

As we see it

People with bad credit are far more likely to finance a vehicle with hidden damage than other used car shoppers. Following the steps above, including a thorough vehicle inspection by an ASE certified master mechanic, can prevent that from happening.

Something else that’s important: if you’re having issues with your car credit, Auto Credit Express can help you find a dealer for your best opportunity at approved auto loans.

So if you’re ready to reestablish your auto credit, you can begin now by filling out our online car loans application.

Tags: Bad Credit, flood damage

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