2 Common Salvage Car Scams to Avoid

January 27, 2012

A salvage car is one that has been involved in a major accident and been deemed to not be worth repairing by an insurance company. Once an insurance company declares a vehicle, it pays the maximum market value of the vehicle to the insured and then disposes of the vehicle by auction it off to the highest bidder.

The vehicle is then issued a special type of title by the states where the vehicle is registered. A salvage title vehicle is often difficult insurer, has a stigma that is always attached to it and is worth nowhere near as much as than comparable vehicle that has a clean title -- even if the vehicle has been restored to 100% operating condition.

While most state and federal laws require a used car dealer or private seller of a vehicle with a salvage title to disclose the fact to the buyer, some unscrupulous sellers did not. So, here is some on common scam car scams associated with salvage titles that you should be aware of.

Title Washing Scam

Many salvaged title vehicles are purchased by rebuilders and then rebuilt so that they appear to be normal used cars. While purchasing a salvage title vehicle can certainly save you a lot of money, you have to be aware of the title washing scam. This type of scam is also commonly referred to as lemon laundering, and is still practiced by many unscrupulous used car dealers and car brokers.

The scam involves registering the vehicle in several states, one after another. This usually takes place in states that have rather lax or loose rules and regulations concerning the documentation of car titles. If a dealer registers the vehicle enough times, there is a good chance that the title will eventually end up not having a salvage or junk title annotation on it. The dealer is then able to sell the vehicles as a normal used car, and usually collects a premium on the vehicle.

The best way to avoid a title washing, or lemon laundering, scam is to do a title search on the Internet. Visit sites like Carfax and pay a few dollars for a vehicle history report before purchasing any use vehicle. These types of reports are usually very accurate and can quickly give you information about the vehicle's title history. The money you can save versus buying a salvage title vehicle could be thousands of dollars.

Quick Sale and Lost Title Scam

The lost title scam is perhaps the biggest type of salvage title fraud there is. However, the scam is usually not carried out by used car dealers, but is rather perpetrated by individual sellers. The scam usually works like this: the seller of vehicle tells you that he must sell the vehicle quickly and is willing to sell it at a deep discount.

The tells you the reason for the sale and at such a low price is because he/she has lost the title. The seller may tell you that he/she doesn't have the funds to apply for a new title, or simply doesn't have time. They may offer you some sort of written authorization so that you can apply for the title yourself. What they don't tell you is that the vehicle has a salvage or junk title, and even though you got a discount, you still paid way too much for the vehicle. Again, do a vehicle title search online to avoid the scam.

Related Questions and Answers

What are the Average Fees to Get a New Car Title?

You may need to get a new car title if yours has been lost or damaged. The process and cost differs to get a new car title in different states. A brand new car title is more difficult to obtain if you have recently purchased a car without a title, as it will be more time consuming. You will need to complete a Certificate of Title and Registration of a Motor Vehicle, and this can be obtained at a relevant government office or downloaded off the Internet. The title owner should sign the application, then take the completed forms to a motor vehicle branch office, and pay a $5 fee for replacement titles.

Can I Buy a Car with No Title?

You can buy whatever you want, but when you buy a car with no title, you take a big risk of being a fraud victim. When you buy a car with no title, you are taking a risk, but sometimes, it is less risky if a simple contract is entered into with the seller that includes warranties, payment details and other information. Take into account whether it is a new or second hand car and research the car's details on the Internet to look for anything suspicious. You may get a discount on a car, but then inherit a stolen car or traffic fines. Unless you intend to use the car for its parts, it is not recommended to buy a car with no title.

Is Selling a Car with No Title Illegal?

To sell a car with no title always looks suspicious to the buyer, but if the vehicle is more than ten years old, it can be sold for parts legally. This means that the car should be dismantled and not driven, and the only reason you would buy such a car is if you are building or restoring cars yourself. If you are trying to sell a car with no title, it will be useful to check whether there is a lien on the car. So it is necessary to contact the car's lender who should release the lien before ownership can be legally transferred. This is a time consuming process, but it is worthwhile to track down the title.

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