The recent flooding in Texas could prove to be especially problematic for car buyers with less than perfect credit.

Flood damaged cars

Because credit-challenged borrowers usually choose to finance a used car, they should be aware of that fact that they are especially susceptible to buying one with hidden damage.

One study conducted by Experian Automotive noted 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 went on to state 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."

Texas flooding

Since this "negative vehicle history" includes flood damage, these consumers need to be especially cautious, as thousands of vehicles that were damaged by the recent storms in Texas are, according to the National Insurance Crime Bureau (NICB), just beginning to hit the market.

"Unfortunately, natural disasters bring out dishonest salvage dealers who don't tell you that the vehicles they're selling are heavily water-damaged," said NICB President and CEO Joe Wehrle.

"Consumers need to know that these vehicles may appear advertised for sale without any indication that they were affected by the flooding. As always, buyers should be careful when considering a used vehicle purchase in the weeks and months following a disaster like this."

So what can be done to avoid becoming a victim?

The National Automobile Dealers Association (NADA) suggests these preliminary steps:

  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. 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.

Next, check the NICB web site where the VIN number of the vehicle can be entered to see if it has been reported as a stolen or salvage vehicle. If the report is clean, order a vehicle history report (Carfax, AutoCheck and others offer this service).

If things still look good, 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).

The Bottom Line

Consumers with checkered credit are far more likely to get stuck financing a vehicle with hidden damage than other buyers. By following all the above steps they can prevent this from happening.

One more tip: Auto Credit Express helps credit-challenged consumers find those dealers that can give them their best chances for auto loan approvals.

So, if you're ready to rebuild your credit, you can begin now by filling out our online auto loan application.