Used Cars - Salvaged & Rebuilt

In Illinois we have four classifications of vehicle title. The first is unmarked or clean. After that a vehicle can be branded as Salvage, Rebuilt or Junk. Titles with Salvage or Junk branding cannot be plated and driven on the street. A Salvage vehicle can be repaired and upgraded to Rebuilt but a Junk Certificate cannot.

It is being reported by Carfax that in the United States, over five million (5,000,000) autos and trucks were written off by insurance companies as total loses in 2007. Further they are stating that over half of those vehicles are being rebuilt and returned to our highways. Think about that, over two and one-half million plus (2,500,000+) vehicles that an insurance company deemed total loses are being rebuilt.

Let’s look at the facts; first, what makes a vehicle a total loss? It is by insurance company standards. Rule of thumb is that if the damage (cost of repair) is equal to or greater than eighty percent (80%) of a vehicle’s retail value it is not repaired but sent to a junkyard. That may vary legally from State to State with at least one state that requires a repaired vehicle where repairs exceed eighty percent (80%) would receive a branded title even if it stays with the current owner.

Well, what is the price of salvage? Generally speaking, an insurance company believes it will be able to recover twenty percent (20%) in the salvage sale. Shrewd, why pay more than 80% in repairs when the company knows it can get 20%? And that makes perfectly good sense. Today, insurers are using salvage companies, such as Copart, that hold large scale auctions that they hope will increase the return on salvage units.

How does one make money by buying something for 20% of its value that will require 80% of its value to bring to pre-loss condition? Not to mention that in its repaired state it will not be worth its original value. The rebuilders have to do it by cutting corners. Since insurance companies are very cost conscience and consider every possible cost cutting procedure they can in order keep costs down, it is very difficult to find corners to cut. At least to cut them without reducing the value of the repaired car even more.

What I have seen happen is that the rebuilder straightens parts that should have been replaced, often times critical structural components that effect the crash worthiness of the vehicle. These “modifications” can effect the critical deployment of the airbags. That is if they have actually replaced the airbags and not just replaced cosmetic covers and removed lights.

Are these repairs so bad that the average person can readily see the problems? Not so much. I like to refer to these repairs as “beauty is skin deep, ugly goes all the way to the bone.” The paint shines and while there are usually many cosmetic problems a majority of consumers would never notice. Body lines aren’t good and it may not even go down the road straight. But unfortunately, the average person will not see the problems.

Additionally in Illinois a fleet operator, a company that operates over five (5) vehicles, such as a Rental Car Company, must apply for a salvage vehicle and go through the steps of bringing that vehicle to a Rebuilt classification if damage exceeds thirty-three percent (33 %) of its retail value.

Copart, the previously mentioned salvage auction company, has stated that over six hundred thousand (600,000) totaled vehicles have been retained by their original owners bypassing the Salvage/Rebuilt system. It is unclear whether this number was included in the Carfax numbers or not.

Finally, I have inspected too many vehicles that consumer’s brought to me with a Rebuilt Title that were not repaired safely.

So what can you do to protect yourself if you are buying a used car? In addition to Carfax, Autocheck also offers vehicle history reports online for a fee. If your car was previously registered in Illinois, the Secretary of State offers a free service to check the current branding of a Vehicle Identification Number (VIN). Go to http://www.ilsos.gov/regstatus/ and fill out the form. These services will only report known history and as the old saying goes, “garbage in, garbage out.” So after the known history is determined to be clean, get the potential purchase inspected.