Monday, August 13, 2012

Watch for Previously Wrecked Used Cars

Story first reported from USA Today

Getting a used car's history report isn't the safeguard many think it is against buying a car that was wrecked and rebuilt. Without a thorough inspection by an independent mechanic, it's almost impossible to tell, consumer experts say.

Each year, about 6 million cars are in crashes serious enough to report to police and insurers. About 12% of these are totaled or "salvage" vehicles, and that doesn't include flood-damaged cars.

Some of these wrecked cars are rebuilt and wind up on used car lots, even at prominent dealers. That can cause problems with the vehicles' performance and safety, along with making them more difficult to resell, crash experts say.

Crash reporting and disclosure is so spotty, some can have "clean" history reports from companies that sell them.

Some examples of problems with these history reports:

• Firefighter Bobby Smith bought a used 2003 Ford Mustang Cobra in 2010 in Indiana. In a lawsuit, Smith claimed the dealer knew the car was in a severe front-end collision. Smith says he discovered the damage when doing work on the car right after buying it. At the trial, which ended in a hung jury, Smith testified the dealership used a clean Carfax report to convince him the car had never been in a crash. The case is scheduled for retrial in January.

• When Florida-based Juan Sanchez tried to trade his 2007 Mercedes E350 in to the dealership he bought it from as a certified used car, Mercedes-Benz of Pembroke Pines showed him a Carfax report indicating he had an accident while he owned it. But in a lawsuit, Sanchez said the crash predated his purchase, and Carfax had the date wrong. In September, an arbitrator awarded Sanchez $3,500 in damages from the dealership for "unfair/deceptive acts," but denied "fraud and negligent misrepresentation" claims.

Dealers say they get duped, too. They were involved in the push for a 2009 law that requires insurance companies to share their data on totaled vehicles with a new Justice Department database, the National Motor Vehicle Title Information System.

The National Automobile Dealers Association pushed for the database because "Dealers don't want rebuilt wrecks on their lots," says NADA spokesman Bailey Wood. He says the database will "permanently red-flag severely damaged" vehicles.

Carfax spokesman Larry Gamache says his company gets salvage data from insurers that make up about 80% of the industry, police departments, crash estimators and repair facilities. Carfax doesn't believe its "data is limited in any way," Gamache says, but adds, "No report is going to have everything."

Carfax also offers to buy back any vehicle purchased based on a Carfax report that doesn't mention that its title showed it was a salvage vehicle. The company has bought back 70 cars in the 10 years it has been offering to do so.

Kansas City, Mo., plaintiff attorney Bernard Brown says his law firm has received hundreds of complaints in the last 15 years from consumers who bought cars with clean reports that turned out to have previously been "severely wrecked or flooded."

Insurance Information Institute President Bob Hartwig says insurers aren't to blame: Many older models that are totaled aren't insured, and many people get cars repaired without reporting the crashes to insurers.

Robert Duff, Smith's lawyer, says some people don't find out they bought a rebuilt wreck until they pay off the loan and see the title has been branded as a totaled vehicle.

One of his clients found more than $8,000 worth of repair receipts in the glove box — on the way home from the dealer.

"The best way to know if the car has previously been wrecked is to have a professional inspect it — it really isn't that expensive," says Duff. "It costs between $50 and $200, and it's money well spent."

Tips on buying a used car

Buying a used car doesn't have to mean "buying somebody else's troubles," says Jack Gillis, co-author of The Car Book. Thanks to leasing and some owners' inability to keep up with payments in this economy, Gillis notes, there are many great used vehicles available, many with time remaining on their warranties.

Key steps in the process:

• Go to a dealer or person you have good reason to trust.

• Check Consumer Reports' quality ratings and the National Highway Traffic Safety Administration's complaint database to see what others are saying about a vehicle you're considering.

• Get a vehicle history report. To learn more about possible crashes and problems, get a report from Carfax, AutoCheck and the Justice Department's new database at

• Have an independent mechanic check the vehicle for mechanical, frame and electronic problems. Flood damage can wreak havoc on a car's electronics.

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