Understand Used Car Salvage Titles

As you shop for a used car, you might come across the phrase “salvage title” in a used car advertisement. The price is going to seem right and you’re really going to want to buy it. Just make sure you act with your brain and not your heart. There are a lot of things to consider before you can understand used car salvage titles. 

We're not here to say used car salvage titles are automatically a bad idea, but make sure you know what you’re getting into before purchasing a used car with a salvage title.

Here are four things you absolutely have to do before even considering buying a vehicle with a salvage title:


•Understand What a Salvage Title Is


•Get a CarFax report

•Get a Qualified Inspection

•Weigh the savings vs. future costs
 
Understand What a Salvage Title Is


In almost all cases, salvage title is given to any vehicle that has sustained damage worth 75% or more of its value. For example, if you drive a 2002 Honda Civic worth $9415 and it suffers $7061 in damage in a collision, it’s going to be branded with a title stamped “salvage.” In other words, it’s not considered fit to drive. Some states also call this a junk title.

According to carfax.com, the following 11 states also use salvage titles to identify stolen vehicles: Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, and Oregon.

As mentioned, requirements are going to vary by state. In Florida, a car has to be damaged to 80% of its value before the accident. Vehicles in Minnesota are considered salvaged when they are declared "repairable total loss" by an insurance company, were worth at least $5,000 before the damage or are less than six years old.

A $4,000 car cannot be deemed salvage in Minnesota, which is a bad thing. Buyer beware when buying older cars from this state (or states with similar requirements). It makes poorer people more susceptible to unsafe vehicles.

The Arizona Motor Vehicle Division sums it up well with this statement: “Needless to say, there is risk involved in buying a restored salvage vehicle. While many of the parts may be new, there will be some that are not, and even trained mechanics cannot always gauge the life expectancy of a vehicle. Further, the vehicle will be difficult to resell if you ever choose to, and very few, if any, dealers will take it as a trade-in.”

By the way, it’s considered fraud to sell a vehicle without disclosing that it once had a salvage or junk title. That’s why titles will be branded “resalvaged” or something similar to denote a vehicle that has been repaired from a salvage title.

Here’s an important tip when dealing with a resalvaged title. Make the seller demonstrate what work has been done. In most states, receipts for parts and repair work have to be submitted in order to get the resalvage title. You just can’t walk into the motor vehicles department and get the new title without proof.


Get a CarFax Report


Typically, CarFax reports aren’t the be all and end all, but I think you’ll find them useful when dealing with vehicles with salvage titles. They provide a great deal of information about a vehicle’s history if you know what you’re looking for.

The details section of the report is going to focus on two important areas:

• frame damage check

• airbag deployment check
 
Frame Damage Check: Cars with salvage titles have major problems. This is a warning that absolutely needs to be checked out. Your best bet is going to be an auto body repair facility. These mechanics have the best expertise for checking frame damage.
 
It’s important to have the frame check because it’s the basic skeleton of your car. Metal that has been straightened after a collision is permanently fatigued. That could lead to future weaknesses or problems. It’s just like a broken leg that has been set. That bone is going to give you trouble somewhere down the road.
 
Airbag Deployment Check: This is extremely important – not just because it indicates the car was in an accident and needs further inspection. You need to have your mechanic make sure the airbag was replaced. Unscrupulous body shops may not do the work.
 
Get a Qualified Inspection


As mentioned above with CarFax reports, you need to get a qualified inspection of any car with a salvage title. Actually, you’re going to need two: frame and mechanical.

Frame Inspection: The most important inspection is going to be the frame. Find an auto body shop with certified technicians to do this work. It’s worth the cost. These men and women have the most experience in fixing frame problems. They’re going to know the true condition of the used car’s frame.

Some folks recommend going to three auto body shops. I’m neutral on that idea because it is a major time investment and financial investment. I’d recommend three inspections on a vehicle worth more than $50,000. On less expensive vehicles, you begin to eat up your savings from buying a salvage-title vehicle.

Mechanical Inspection: This should be done for every used car regardless of its title. This will spot any potential long-term or short-term operating problems. The existence of a problem isn’t an automatic deal breaker. It’s just another factor in determining the vehicle’s value.

Weigh the Savings vs. Future Costs

Is it worth it to you to save $2000 on a car, if it’s going to cost you $3000 down the road in repairs? It might be if you’re capable of performing the repairs.

Also, are the savings worth it if you’re going to have trouble selling this car down the road? You may have difficulty finding savvy buyers who know salvage titles or resalvage titles aren’t always a deal killer.

The savings could also be worth it if you plan to run this car into the ground. If you’ve saved a good deal of money, you can always junk the vehicle when the time comes instead of repairing it.

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Is Your Check Engine Light On?

Have you ever noticed that when your Check Engine Light comes on, the car runs fine? There are no noises or signs of anything uncommon going on? Why? Becasue there isn't anything seriously wrong. It's more than likely a quick, easy, inexpensive fix that shouldn't cost you any more than a couple hundred dollars, at most.

Here's What To Do and What Not To Do.... and Why:

- First and foremost, DO NOT FREAK OUT! Why? Because you will end up spending hundreds and hundreds of dollars more than you should.

- After you DON'T freak out, check your gas cap. Why? Because a loose gas cap is a common reason for triggering a Check Engine Light. It sounds too simple and silly to be true, but guess what.... it's true. After filling up your tank, make sure the cap clicks at least 3 times before jumping back in your car. If this is what triggered the light, it will turn off once it's tightened.

- If that didn't fix the problem, go to an Advance Auto Parts, Discount Auto Parts, or NAPA store. Why? Because they ARE NOT mechanics. They sell parts, not fix or replace them. They will scan your car for free and they will be honest with you, unlike most mechanics (unfortunately). Their scanner will pull a "code" which will be translated into the actual problem (if there actually is a problem). In turn, they may try to sell you the part (more than likely a sensor or hose), but it's up to you whether or not you want to purchase the part yourself. Either way, you will know exactly what triggered the light to come on, so you will not be taken advantage of by a Service Shop or Repair Facility. You can save some money by purchasing the part at the Auto Parts Store and having a Service or Repair Facility install it. Believe it or not, it can actually be absolutely NOTHING AT ALL (you'll see what we mean later in this article). If this is the case, the Auto Parts store can reset the computer and the light will turn off.

- DO NOT go to AAMCO, or any other Franchise Service and Repair Facility for their FREE diagnosis of what triggered the light. Why? You know, as well as us, that nothing is FREE at these places. Well, the actual scan might be, but we will guarantee their estimate for repairs will exceed a couple hundred dollars, when in fact it should barely cost that much to fix.

- DO NOT go to the Manufacturer's Service Department. Why? Same as above, except they will not scan the car for free, they'll probably charge you an hour labor, when in fact it will take them all but 30 seconds to scan, and then hit you up for $400-$500 in unecessary repairs. You'll be surprised how many Manufacturer's set the cars computer to trigger that light at certain mileage intervals, in hopes you will freak out, run to them, and get charged hundreds and hundreds and hundreds of dollars for them to do absolutely NOTHING but reset the computer! The same thing that can be done at NAPA, Discount Auto Parts, or Advance Auto Parts stores for FREE!

That's it. It's that simple. Again, common reasons are a loose gas cap, or a $50-$150 sensor, or maybe a hose with a leak, or in fact nothing at all! So don't get all nervous and think your car is broken, because in fact it's not that serious of an issue.

One thing we do want to point out is if the Check Engine Light is flashing. If this happens, you actually do have some serious issues. In this case, get to a reputable Service and Repair Facility ASAP. Why? More times than none, a flashing Check Engine Light is in fact a direct engine or transmission issue.

- Tampa Bay Auto Network

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4 Tricks Credit Cards Play So You Pay More

Anyone who's been using credit cards for a period of time has likely noticed the creditor doesn't have the customer's best interests in mind. In fact, it's quite the opposite. Credit card companies look for sneaky ways to charge you more money, while you're stuck wondering what happened.

1. Universal Default

A universal default clause in your credit card agreement basically allow creditors to increase your interest rate for virtually any reason or no reason at all. Your rate might go up because you were late on another credit card payment, because you took on more debt, or any number of things the creditor thinks makes you risky. You can try asking for a lower interest rate, but the creditor may not oblige.

How to avoid the cost

Carry a credit card balance low enough for you to pay off at any time. That way, if your creditor decides to increase your rate, you can pay off the card before a finance charge hits.

2. Short Grace Period


A short grace period limits the amount of time you have to pay off new purchases and avoid a finance charge. The shorter your grace period, the less time you have to make your payment and the greater the chance the creditor can charge a finance charge on your balance.

How to avoid the cost

If your credit card has the option to access and pay your bill online, take advantage of it. Otherwise, be prepared to mail your payment as soon as you receive your billing statement.

3. Due Times


Some credit card companies put specific guidelines on on-time payments right down to the hour and minute. One minute late and you could be hit with a late fee, a higher interest rate, and a negative entry on your credit report. Not only that, your other creditors could also penalize you with an increased interest rate.

How to avoid the cost

Plan to send your payment a few days in advance of the due date. Use online bill pay to set up an automatic payment. Make the payment by phone, even if there’s an extra charge. If you have to snail mail your payment, don’t hesitate to mail it express it with priority mail or overnight service. Any extra charge you pay for express mail will be less than the late payment.

4. "Fixed" Interest Rates That Change


Your credit card agreement might specify a fixed interest rate, but that doesn't mean your rate won't change. It just means the creditor has to notify you before changing the rate. If your rate increases and you carry a balance from month to month, the amount you pay in finance charges will also increase.

How to avoid the cost

Pay your credit card balance in full each month to avoid paying a finance charge. Or, when your creditor notifies you of an interest rate increase, exercise your option to continue paying your balance under the current interest rate. The catch is you'll have to close the account, a move that could affect your credit score.

- Tampa Bay Auto Network

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Surviving a Credit Crunch

After the mortgage meltdown in mid-2007, lenders cracked down on home equity loans, causing consumers to turn credit cards as a lending source. Credit card debt and delinquencies rose. Credit card companies, feeling the brunt of delinquencies, began cracking down on credit, increasing interest rates and credit card fees, and decreasing credit limits.

What's a Credit Crunch?

A credit crunch is a period of time in which credit and loans are more difficult and costly to obtain.

There are individuals and companies who invest in debt. These investors make money when consumers pay back their credit card and loan balances. Investors don't make money when consumers don't pay back their debt.

When credit card and loan delinquencies rise, debt investments become unattrative, leading investors to pull their funding. As a result, banks become stricter with lending and consumers, especially those with credit problems, find it harder to get credit.

Here's what you can do to survive a credit crunch.

Keep Paying Your Credit Cards and Loans On Time.

Credit card companies have to make money to stay in business. When investors start pulling funding, credit card companies find ways to get more money from cardholders. Increased late fees and interest rates are one way of doing this. Because of universal default, your interest rate on a particular credit card could increase even if you're late on another credit card's payment.

According to Smart Money, banks could start sending accounts to collections sooner, if credit card delinquencies rise at a swift rate. 

Not only do timely payments save you money and keep you out of collections, it also keeps your credit score healthy. A good credit score indicates a trustworthy borrower - one that credit card companies aren't afraid to give credit to.

Keep Your Balances Low


Since credit card issuers are tightening credit, they may decrease your credit limit, leaving you at or above your limit. In ordinary times, your credit limit would only be lowered in response to some negative action on your part, like repeatedly going over your limit or missing credit card payments. In a credit crunch, credit card issuers will decrease your credit limit simply because of market conditions.

A lower credit limit can hurt your credit, making it seem like you've maxed out your credit cards, even though you may not have. Keeping a low balance will reduce the damage of a lowered credit limit. A zero balance will eliminate the damage all together.

Have An Emergency Fund

An emergency fund keeps you from having to resort to credit during an emergency. During a credit crunch, if you need credit and don't have it, you might have a card time getting it. If you already have a reserve of cash, you won't have to resort to credit at all. Ideally, you'd have an emergency fund anyway - credit crunch or not.

Take Steps To Improve Your Credit


Risky borrowers - those who are likely to become delinquent on their credit cards - are hurt most by a credit crunch. They pay higher finance charges and fees on their credit accounts. It's also harder for these consumers to get new credit.

Consumers can reduce the effects of a credit crunch by taking steps to improve their credit. Making timely payments on all bills, keeping credit card balances low, and limiting new applications for credit are all ways you can improve your credit.

Stay Smart With Your Credit Card Usage


Good credit goes a long way during a credit crunch. If you have good credit, keep it that way. Charge only what you can afford and pay your balance in full each month.

Be aware that creditors might decrease your credit limit, especially if they suspect you'll miss a payment. Pay attention to your credit card statements and other notices that come from your credit card companies to catch a lowered limit as soon as possible.

- Tampa Bay Auto Network
 
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Tips and Advice on Reading Used Car Vehicle Identification Numbers - VINs

The most important number in a used car is not its price or fuel economy rating. It is its Vehicle Identification Number or VIN, as it is more commonly known. Reading used car vehicle identification numbers will help you know if the used car or truck you are buying has the equipment you think it does.

How To Read a VIN

A VIN is basically a serial number for your car, truck or SUV. It is 17 characters long and is a mixture of numbers and letters. It has four parts:

• World Manufacturer's Identification (WMI - three numbers or letters)

• Vehicle Description Section (VDS - five numbers or letters)

• The VIN Accuracy Check Digit (one number)

• Vehicle Identification Section (VIS - eight numbers or letters)

The First Three Characters

These numbers and letters are the manufacturer identification and tell you where the vehicle was built.

The First Character tells you where the vehicle was built. The U.S. is 1 or 4, Canada is 2, and Mexico is 3. Australia, New Zealand and some South American countries are also represented by numbers. Some of the more common countries are: Japan (J), Italy (Z), Germany (W) and Great Britain (S).

The Second Character will tell you the manufacturer while the Third Character identifies the kind of vehicle or the company’s manufacturing division.

The 4th to 8th Characters

This is the vehicle description series. It identifies the body style, powerplant, brakes, and the restraint system. The problem is different companies put the information in different places. With GM, for example, the restraint info is in the 7th character position, while BMW has the code in its 8th character position. By the way, if you’re buying a Chevy Impala and the 7th digit is a “0” your airbags have been deleted.

The 9th Character

This is something called a check digit. It verifies the previous 8 characters based on a mathematical computation developed by the U.S. Department of Transportation.

The 10th Character

This represents the year the car was built. Cars built before 1980 don’t have VINs, which is why the system starts in 1980. You will also notice the system does not use every letter in the alphabet. I, O, Q, U, and Z are omitted. The system are repeats itself every 30 years probably assuming most people could tell the difference between a 1980 and 2010 model.

• A: 1980

• B: 1981

• C: 1982

• D: 1983

• E: 1984

• F: 1985

• G: 1986

• H: 1987

• J: 1988

• K: 1989

• L: 1990

• M: 1991

• N: 1992

• P: 1993

• R: 1994

• S: 1995

• T: 1996

• V: 1997

• W: 1998

• X: 1999

• Y: 2000

• 1: 2001

• 2: 2002

• 3: 2003

• 4: 2004

• 5: 2005

• 6: 2006

• 7: 2007

• 8: 2008

• 9: 2009

• A: 2010

• B: 2011

• C: 2012

• D: 2013

• E: 2014

• F: 2015

The 11th Character

This tells you the plant where your car was built. Frankly, when buying a used car, this should not be a huge concern. Quality problems will have demonstrated themselves long before your purchase.

The 12th through 17th Characters

These are what most of us call the serial numbers of the car. Each manufacturer has a different system for what this means.

In the end, the best bet for understanding various components of a used vehicle’s VIN, is to go to a search engine and type in Understanding BMW VIN. It will take you to various sites that will help you further decipher the VIN.


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Predicting What A Used Car Will Be Worth

Do you have your eye on a new car or truck that has just been introduced, but you know you can’t afford it new? Well, there is a simple formula for predicting what a used vehicle is going to be worth three years down the road.

The first fact to consider is almost all used cars, trucks, SUVs and crossovers lose a minimum of 24% of their value after 12 months. That’s based on the Manufacturer Suggested Retail Price.

To keep things simple, a used car costing $20,000 would be worth $15,200 after one year. So say the folks from Black Book (www.blackbookusa.com). It sounds like a dating sight, but it’s actually the number one resource for predicting a car’s residual value when it goes on sale. That’s extremely important for setting leasing rates.

Then, from the basic 24% drop in value, you can start deducting 6% a year. A decent used car, introduced with the price of $20,000, would have an estimated value breaking down this way:

•After 12 months: $15,200

•After 24 months: $14,288

•After 36 months: $13,430

•After 48 months: $12,624

Of course, this formula will not work 100% of the time because some cars and trucks have residual values that drop like stones after 12 months. Case in point would be the Chevy HHR.

• 2009 Chevrolet HHR LT - $20,729

• 2008 Chevrolet HHR LT - $11,225 dealer price, according to Edmunds.com.

That’s a drop of 46% in one year. Wait two years and you’re looking at a $10,551 vehicle. Proving pretty much if you want a Chevy HHR, buy a used one. You are going to save a ton of money.

Use this basic formula to help you get started on what the value of a used car should be. It will save you from spending too much on your next used car or it will help you put aside the right amount if you’re a good saver!


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