Title washing should be a serious concern for anyone that wants to buy a used car. There is no need to be scared away from buying a used car, because this scam is fairly easy to avoid, but you still need to be aware of not buying a used car with a washed title.

Here is how the title washing scam works…

Lets say Texas, or wherever, gets nailed by a some really bad weather that includes severe flooding. Happens all the time all over the world, right? Right. Okay, so what happens is that hundreds or even thousands of cars get totally flooded and much of this, but not all, happens in coastal area’s with salt water.

Then the owners of those cars make an insurance claim of course and then the insurance companies will declare these cars “totaled” and then they will pay off the owners for the blue book value of their vehicle or pay off lender.

Old cars, nice used cars with low miles…and even brand new cars and trucks by the hundreds get “totaled” by the insurance companies after a flood.

“Even new cars?” Of course. Guess what happens to all those new cars at the new car dealerships when they get flooded by the hundreds? Well, the insurance companies have to “total” them too and now you have thousands of “new cars” with zero miles floating around (no pun intended!) out there in the used car marketplace with funky old salvage titles.

“What the heck is a salvage title?”

A salvage title is what the DMV issues a car after its been declared totaled by an insurance company.

“Okay, so exactly what does totaled mean?”

Cars are totaled for lots of reasons like being in a bad wreck, stripped by car thieves at a chop shop, or getting flooding, etc., but the bottom line is that an insurance company will declare that a vehicle is totaled when it would cost them more than the car is worth to repair it.

“And specifically, what is so bad about flood damaged cars?”

Because flood damaged cars will be chronically plagued with problems like mold and faulty electrical systems until someone finally takes the vehicle to be crushed. The problem is that many of those electrical problems don’t appear until many months down the road because it takes time for the water to corrode everything.

“What do insurance companies do with all those totaled cars?”

The insurance companies have a real problem on their hands with all those junky yet often new cars…and it is the one time I can feel sorry for them. Well, almost! They have to sell them super cheap at used car auctions. Okay, so where does the issue of title washing enter?

Read Part 2 on Title Washing  >>