What is a “rebuilt wreck”
“Get outta town!” you exclaim as the dealer tells you the price of the lightly used Acura that looks like it just rolled out of the factory. “I think it’s YOU, sir, that’s getting out of town…in this beautiful luxury vehicle right here!” he replies, almost as elated as you are. As your dopamine levels surge, you impulsively decide to buy it. How can you refuse? Everyone loves a great deal and you can’t bare the thought of someone else snatching this beauty up. Excited, jittery and moderately confused you think to yourself, this is so good, it should be illegal!
Oops. Maybe it is. There’s a possibility that you are buying what is called a “rebuilt wreck.”
According to Consumer Reports, approximately one million salvage vehicles return to the roads each year. There are potential dangers, both physical and financial, involved with buying a “rebuilt wreck.”
A “salvage” is a car that an insurance company has determined is a “total loss.” A rebuilt wreck is when that salvage car is bought, rebuilt and resold. The qualifications of a “salvage” vehicle vary between states and this, as will be mentioned later, is a problem that perpetuates the fraud related to rebuilt wrecks. In Florida, a car is considered “salvage” if:
- The cost of fixing the car (determined by the insurance company) is 80 percent or more of the value to completely replace it.
In Florida, once a car is determined a “salvage,” the current owner must apply for a salvage title before it’s disposed. This is the state’s attempt to keep track of the vehicle’s history
This process is extremely important because it allows the state to “brand” the car title so future owners (if there are any) know it’s history. Some examples of brands that appear on titles are Reconstructed, Recovered Theft or Salvage.
What are the dangers
Just the term rebuilt wreck involuntarily invokes a certain fear in buyers. This car was totaled, smashed up, destroyed to almost nothing and yet here it stands, all patched up and shining like new. There’s a disconnect about that situation that makes us rightfully wary.
Consumers should always look at a rebuilt car with a critical eye because many times, in order to capitalize on the potential profits, dealers and mechanics take short cuts to save on costs.
Dealers and mechanics attempt to save money by accepting shoddy repair work, covering up water damaged floors with new carpets, or even refusing to replace something as important (and lifesaving) as airbags because realistically, how would the consumer ever really know the difference? They may even rip out the airbag indicator light as a way to cover their tracks. People have died from this short cut (see this CBS article http://www.cbsnews.com/stories/2004/04/29/eveningnews/consumer/main614819.shtml).
Sometimes, using subpar welding and a mishmash of supplies, mechanics are even able to fuse two halves of two different wrecked cars together, creating a scary Frankenstein vehicle that has not only seemingly indefinite mechanical dysfunctions but that is actually really dangerous because it’s not properly done.
It’s these cost saving techniques that allow the dealers to sell these cars at such low prices. So while the extremely low price tag may be enticing, you will probably end up paying more for the car in the long run because of repairs and maintenance needed to fix the broken product you were, sometimes, unknowingly dealt.
How do they pull it off?
A lot of people don’t realize that they are buying a rebuilt wreck either because they are purely uninformed and don’t know to ask the dealer or do a background check on the car (via carfax.com, for example). But sometimes the title of a rebuilt wreck can be completely clean. How can this be, if, as we saw earlier, people are required to title their car “salvage” before they get rid of it?
Here’s where the difference in state laws comes in. What in one state is considered “salvage” may not be considered the same thing in a different state. So, if a dealer buys a car in a Kentucky auction (just for examples sake), (s)he may be able to get a clean title from that state and bring it back to Florida, or another state, where the car WOULD be considered a salvage. Now the car has no mark or brand on the title to let the future owner know the pervious state or history of the car. This process of clearing the title is called “white washing.” This whole process, though rather extensive and time consuming, is worth it to the dealers because the price of a clean titled used car is significantly higher than the price of a “rebuilt wreck” or “salvaged” used car.
States realize that differing standards makes it easier for dealers to white wash. So they have developed a new system, called National Motor Vehicle Title Information System (NMVTIS), that pools information from 39 states (11 more are currently being developed) and allows both consumers and states valuable access to the car’s title history.
Not all dealers are sly enough to whitewash. Sometimes they may lie and say that the car is only “used” even though it clearly states on the title that it’s a salvage. Usually consumers don’t bother to ask to see the title to verify and sometimes, in cases where they do, the dealer says they can’t find it or they may just refuse to show it to you.
But here’s the thing. It’s not just small time, sweet talking used car dealers that are in this game. There are huge players, like State Farm, that are also not disclosing imperative information to consumers. In 2005, State Farm publicly stated that they had failed to retitle approximately 30,000 vehicles to reflect their previous damage. This happened over the course of five years (1997-2002). Those who owned one of those 30,000 vehicles had to immediately retitle their car. The value of their cars consequently decreased significantly.
How to spot it
So what can you do to at least know before hand what kind of car you’re buying?
Before buying, you should:
- Get a vehicle history report (carfax, etc)
- It can take a state up to three months to report a car as “salvage” to such sites. So, even if the car comes up clean, you should ask where/when the dealer got it.
- Have a mechanic you know and trust examine the car
- If the seller refuses to let you do this, interpret that as a red flag
- If they try to avoid letting you see the title, again, red flag
- If you see the title is new and completely clean, and it’s from another state, look into it further.
- Look physically at the car. If there are varying paint colors, doors don’t squarely close or are uneven surfaces, it could mean that it’s a rebuilt wreck.
- Take a look at this list published by Consumer Reports for more indicators: www.cheapestwaybodyshop.com/pdf/signs-of-a-rebuilt-wreck.pdf
Yes, discovering that you bought a rebuilt wreck is disappointing news, but there is nothing illegal about selling a rebuilt wreck. The legalities come in to play when that fact is intentionally hidden from you. For example, you find on Carfax.com that the insurance company declared this car a salvage one year ago, but the physical title is clean.
Here are a few links to news stories about rebuilt wrecks and their dangers.