Used Car License Plate Warning for Shoppers

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Here’s a warning about what out-of-state license plate you need to be wary of when buying a used car.

In a warning recently from Consumer Reports’ analysts, their recommendation to used car shoppers is to avoid buying any used car with a rebuilt or salvage title.

Rebuilt Title Used Car Qualms

A rebuilt title is one in which the vehicle previously had a salvage title due to a crash, flood damage, theft, or other significant event that would qualify a car as being totaled and unsafe or illegal for the road. A salvage title qualifies as an upgrade for a rebuilt title in some states depending on the repair work done by a qualified mechanic followed by an inspection.

However, hidden flood damage can slip through inspections and not appear until months afterwards as electrical components take time to corrode.

“Generally, most car shoppers should stay away from rebuilt titles,” says Steve Elek, program leader for auto data analytics at Consumer Reports. “That being said, it could come down to a case-by-case basis. For example, you could have a car that has a rebuilt title due to heavy hail damage. That car might be mechanically sound. On the other hand, a rebuilt title could also mean the car was in a serious accident that resulted in significant frame damage.”

CR analysts also point out that buying a car with a rebuilt title can be a problem when it comes to insurance coverage for it, plus the likelihood the resale value or trade-in value of the vehicle will be too depreciated to even bother counting on should you decide to sell the car later.

A Related Problem with Damaged or Stolen Used Cars

However, there is a related problem with these types of vehicles: sellers claiming a lost or misplaced title and reapplying for a new title that reveals nothing about a used car’s history.

According to a column piece from the January 2024 issue of Hemmings Motor News, the application process for new registration and plates for questionable used vehicles in some states was so lax that it became a problem.

One reader’s contribution in the Letters to the Editor “Backfire” column in the January 2024 issue of Hemmings Motor News, wrote in response to an October 2023 article titled “Confessions of a Sinner” regarding out-of-a vehicle registrations in Vermont.

The commenter wrote:

A couple of years ago, I went to a local car show where I saw a mid-’90s Toyota wagon that had some modifications and Vermont plates. Since there is a large Air Force base nearby, I had assumed it belonged to a service member just transferred here; that’s how I ended up in the Midwest. I asked the owner where in Vermont he was from. He said he had never been to Vermont. He explained that since his car had a salvage title when he bought it, he had problems getting it titled and registered in Nebraska. He found that all he had to do was fill out a form, send a fee, and he got Vermont plates.

The Letter to the Editor was a response to a columnist admitting in an earlier issue to having had taken advantage of Vermont’s lax laws that allowed out-of-state applicants to receive a new registration and plates with nothing more than a bill of sale, a filled-out application, and a check.

The columnist admitted he had done this in the past with an old motorcycle he bought that had missing registration papers. Which is not unusual for older model motor vehicles and consequently is very difficult to remedy in many states.

However, the columnist’s admission was a lead-in to news that the state of Vermont recently announced it would no longer be allowing these types of questionable registrations to continue without more proof from the applicant that their request was…let’s see, how should we put it? Honest…. yeah, that’s it.

Vermont’s change of heart on the practice was due to reports that used car brokers and new owners were abusing Vermont’s policy as a way to re-register stolen vehicles and/or avoid having to buy vehicle insurance.

Apparently, Florida’s State Department of Highway Safety and Motor Vehicles issued a fraud alert based on the finding that numerous vehicles with Vermont plates were linked to criminal activity.

To register for new plates and registration in Vermont, car “owners” now have to either:

1. Show proof of a connection to Vermont such as through business or home or vacation home.

Or

2. Get the approval of their home states department of motor vehicles to switch over to Vermont.

Don’t Be Too Critical of That Vermont Plate

However, this does not mean that all used vehicles being sold with a Vermont license plate should be immediately discriminated against. According to the Insurance Journal website, some reasons for choosing Vermont over a home state were common and non-criminal:

“In years past Vermont was happy to register non-residents’ vehicles if they paid the registration fee, which some in neighboring states were happy to do to take advantage of the state’s lower auto insurance costs and taxes.”

For further information on how to register an out-of-state vehicle with Vermont, here is the link to the appropriate new registration form.

For additional articles related to used car warnings, here are a few for your consideration:

Timothy Boyer is an automotive reporter based in Cincinnati. Experienced with early car restorations, he regularly restores older vehicles with engine modifications for improved performance. Follow Tim on  “Zen and the Art of DIY Car Repair” website, the Zen Mechanic blog and on Twitter at @TimBoyerWrites  and Facebook for daily news and topics related to new and used cars and trucks.

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