Consumers with problem credit should know which used car titles represent possible hidden damage and how this could affect a car loan
What we know
For car buyers with bad credit, financing a used car that’s been involved in a flood or a serious accident can often affect the successful completion of an auto loan.
At Auto Credit Express we understand how this can happen because for over three decades we’ve been helping car buyers searching for online auto loans find those dealers that can give them their best opportunities for auto loan approvals.
Today, however, we’ll be looking at used car titles and why buying a vehicle that’s previously been damaged can be especially troublesome for buyers with questionable credit.
Most used cars have what is known as a “clean title.” This is normally the case even if a vehicle has been involved in an accident – as long as the damage wasn’t extensive enough to have it declared a total loss.
But in some cases even if a car has been stolen or has sustained enough damage to declare it a total loss, its title might not reflect this due to an illegal practice.
This practice is called “title washing” and it involves taking a vehicle with extensive damage and re-titling it in another state with a new vehicle title that doesn’t reflect the car’s true history.
In addition to purchasing vehicles with washed titles, used car buyers might also inadvertently sign off on a branded title without realizing it.
In this case buyers should familiarize themselves with what to look for on a car title:
• Check the color of the title. Often states use one color for a clean title and another color or colors for the various title brands.
• Carefully check the front and back of the title you are signing to be sure the words “rebuilt”, “salvage”, “junk”, “fleet”, “mileage unknown” or “stolen” don’t appear anywhere on it.
What buyers can do
If you decide to buy a vehicle with a branded title, here’s what can happen:
Most high risk lenders will not finance a vehicle with a branded title and many insurance companies refuse to insure vehicles of this type. In addition, many state DMVs now run title applications through the national VIN database before issuing a title to the new owner (you).
This means that if the vehicle you buy has a branded title it could be impossible to finance and difficult to both license and insure. If the VIN check reveals that the vehicle was stolen, it will probably be seized by the state.
Even if you can get it licensed and insured, a vehicle with a branded title can turn out to be far less reliable and will be worth much less than a comparable vehicle with a clean title at trade in time.
To prevent this from inadvertently happening, once you’ve narrowed down your used car choices you should:
• Request a vehicle history report.
• If the report is clean, then run the VIN through the national database at https://www.nicb.org/theft_and_fraud_awareness/vincheck.
•Finally, pay for an inspection either from a company that specializes in this or from a certified master mechanic and a body and frame specialist.
The Bottom Line
Your best chance at avoiding financing a vehicle with hidden damage includes using all the tools at your disposal: vehicle history reports, running the VIN through the national database and having it thoroughly inspected before signing any paperwork.
One more tip: Auto Credit Express matches people that have experienced difficulties with their auto credit to those new car dealers that can offer them
their best chances for approved auto loans.
So if you find yourself in this situation and you’re ready to reestablish your credit, you can begin now by filling out our online auto loan application.