Spending: Watch Out for Flood-Damaged Cars

If a used-car deal looks too good to be true, you should do more than kick the tires. The vehicle may be one of the estimated 500,000 flood-damaged cars that could hit the market in the wake of hurricanes Harvey and Irma.

Flood-damaged cars enter the market in two ways: via auto auctions and disreputable sellers. If the owner has comprehensive coverage and the insurance company declares the vehicle a total loss, the car is often given a salvage title, which means repairs cost more than the car is worth. After that, the vehicle is usually sent to be sold at auction, where it can end up in anyone’s hands. As long as sellers disclose that the car has a salvage title, the sale is legal.

However, there are always people looking to make a quick buck, says Frank Scafidi, of the National Insurance Crime Bureau. Some sellers may dry out and clean a flooded car without disclosing the damage. Others may manipulate the car’s title – called title washing, which involves selling the car in another state with looser title laws.

An extremely low price compared with prices for similar vehicles is the first tip-off – especially if the car is listed on Craigslist or is for sale at a shady-looking used-car lot. To see used-car prices, go to www.kbb.com and select “Car Values.”

CarFax recently rolled out a free flood-check tool (www.carfax.com/flood). To use it, you’ll need a vehicle’s identification number. You can also check a vehicle’s flood history at VINCheck, run by the National Insurance Crime Bureau. Or spring for a full vehicle history report at CarFax ($40 for one) or KBB’s AutoCheck ($25).

If you don’t uncover a history of flood damage but are still suspicious, sniff for a telltale odor of mildew, and turn on the radio to see if it sounds distorted. Inspect the instrument panel for trapped moisture. Better yet: Hire a trusted mechanic to do a full inspection.

Rivan Stinson is a reporter at Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.

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