California Governor Jerry Brown signed a law today mandating that California auto dealers have to label salvaged vehicles with a red warning sticker starting July 2012.
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A salvaged vehicle is one that has been declared a total loss by an auto insurance company either because it has been in an accident or submerged in a flood. California is the first state to adopt stickers for salvaged vehicles.
The law also requires car dealerships to register all car sales electronically. About half of California’s car dealers already register their vehicles in the electronic system. Come July all dealers must participate. Dealers will be able to increase the cost of vehicle documentation from $55 for sales and $45 for leases to $80 for both.
The law adds an extra layer of protection into the car purchasing process for consumers. The California New Car Dealers Association is behind the law. In addition to extra protection, the electronic registrations speed the process of registration and getting license plates. License plates, which will be processed as fast as one month, as opposed to the current wait time of six months.
All new- and used-car dealers in California will post a red sticker on used cars that have been flagged in a federal database as junked, salvaged or flood damaged.
While this offers increased protection for the consumers, flood damaged vehicles are often transported to states that have not had flooding. Most consumers today are aware that any used vehicle’s history is available to them using companies like Carfax or Experian’s AutoCheck and should be checked before purchase.
Image source of a car dealership: Wikipedia
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This new system will not
This new system will not protect buyers from purchasing savaged vehicles.
A totaled (salvaged) vehicle will only have its title changed if it was reported to the DMV. However, there are some states that do not indicate remarks on their titles such as “savage, rebuilt, true miles unknown, thief recovery, etc…” Or, if the insurance company does not notify the state that they totaled a vehicle, the DMV will not change the title to ‘salvage, rebuilt, etc…” For example, a few years ago State Farm was sued for not reporting 32,000 totaled vehicles to the States’ DMV. These totaled vehicles were sold to salvage yards with clean titles, were patched together, and re-sold to the public with the original clean titles and a "clean" Carfax report.
It is estimated that a third of all totaled vehicles on the road today will not have their title changed or marked as "salvage".
The #1 reason bad cars are purchased is the buyers’ inability to determine the TRUE condition of the vehicle before purchase. A vehicle history report or a “Flagged” vehicle CANNOT be substituted for a pre-purchase inspection.
Most buyers don’t know the difference between an "ASE Technician" and an "ASE Master Technician". The difference will affect the quality of a pre-purchase inspection and the differences are explained in depth at “UsedCarInspections.ORG”. This consumer site is filled with helpful tips and information on how to select an automotive technician and what type of information you should receive from a pre-purchase inspection.
Also read the “Top 10 Used Car Buying Myths, Mistakes, and Pitfalls” at www.UsedCarInspections.ORG.