Buying a used car on a good day involves some risk. Unknowingly buying one that's been damaged in a flood can leave you with a car that's unsafe and that's worth much less than you paid for it.
Bargain-priced, flood-damaged cars often appear on the market after a natural disaster such as Hurricane Irene. There's nothing illegal about selling a flood-damaged car as long as it's disclosed to the buyer and is declared "salvage," according to the nonprofit National Insurance Crime Bureau. However, some dishonest car dealers buy these vehicles and clean them up -- hiding the flood damage and selling them to unsuspecting motorists.
"When things look too good to be true, they usually are," says Frank Scafidi, a spokesman for the National Insurance Crime Bureau.
Here's what you need to know to help figure out whether you've got a flood-damaged car on your hands that looks too good to be true.
What's considered a flood-damaged car?
A car that's been partially or completely submerged in water to the extent that its body and mechanical parts have been harmed is classified as a flood-damaged vehicle, according to the crime bureau. If the damage is extensive enough to make the car useless, the owner's car insurance company normally settles the policyholder's claim by buying the car and selling it as "salvage" at an auto auction.
Where are flood-damaged cars sold?
Typically, flood-damaged cars being passed off as just fine show up for sale on the Internet, not at legitimate car lots, Scafidi says. Selling a car without telling the buyer that the car has been damaged in a flood constitutes fraud, according to the Insurance Information Institute.
Terry D. McNeil, president and CEO of T.D. McNeil Insurance Services in Folsom, Calif., says that the "most dangerous place" for buying a potentially flood-damaged car is an auction, since the dealer may be in the dark about whether the vehicle has been flooded.
The safest place to buy a car is from someone you know or from a car dealer that gets most of its cars as trade-ins, McNeil says.
Are there records showing whether a car has been damaged in a flood?
To find out the history of a car, you need to find its vehicle identification number, or VIN. This is a unique 17-digit number assigned by a manufacturer to each vehicle.
The VIN shows the vehicle's country of origin and model year, along with information. It's typically stamped onto a plate mounted on the dashboard near the windshield or on the driver's-side door frame.
The National Insurance Crime Bureau's free VINCheck service lets you figure out whether a car has been tagged as a salvaged vehicle that's flood-damaged. You also can pay to run a VIN through CarFax to obtain a vehicle's history, including whether a salvage title has been issued by a state motor vehicle department.
How do crooks get away with selling unidentified flood-damaged cars?
Many of them engage in something known as "title washing." That's when unscrupulous car dealers and individuals eliminate the "salvage" designation from a car's title. This makes flood-damaged vehicles easier to sell to unsuspecting car buyers.
Typically, title washing involves transferring a salvaged vehicle to another state unaffected by the disaster. The state then issues a new title, which no longer shows the car as salvaged and "washes" the title clean. The vehicle then goes on the market with hidden damage.
What are some tell-tale signs of a flood-damaged car?
One of the warning signs is if a car has a new interior, including new carpeting, as that's an easy way to conceal flood damage, McNeil says.
Another source of suspicion: If a car is priced at least 25 percent lower than what you'd expect to pay, it may be flood-damaged. Before you go car shopping, conduct research to pinpoint the price range of the kind of car you have in mind. One place to do that comparison shopping is the Kelley Blue Book website.
Things you can do figure out whether there's flood damage include:
• Look for water stains, mold, mildew or sand under the carpeting and floor mats. • Check for rust on screws in areas that water doesn't normally reach. • Check for mud in the spare-tire compartment. • Pull the seat belts all the way out and look for mold or grime. • Check the car's in-door speakers for flood damage. • Look for water stains, faded upholstery and discolored door panels.