Insurance Firms Auctioning (Katrina Flooded) Cars

[Maddy McCall]

More than 400 vehicles that flooded when Hurricane Katrina battered the Gulf Coast on Aug. 29 will be auctioned off Friday to licensed automotive dealers and dismantlers.

That auction is closed to the general public.

The vehicles, all clearly titled as flooded vehicles, are being provided by insurance companies that already have settled with consumers, said Dan Oscarson, vice president of marketing for Insurance Auto Auctions of Westchester, Ill., which will conduct the auction.

The company resells damaged vehicles for insurance companies, which is one way insurance companies are able to "keep premiums low" for consumers, Oscarson said.....By reselling those vehicles for parts, "we help mitigate those claims."


More at: http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20051011/BIZ/510110361/1005

[Cooley Hurd]

1. If buying a new (or used) car, always use CARFAX!

http://www.carfax.com/

Not all dealers are scrupulous (:rofl:), and you could find yourself with a waterlogged lemon from Katrina.

[unhappycamper]

3. Yes - you should ALWAYS get a carfax on used vehicles. n/t

[Geo55]

8. So it "smells" new......(this scent can be had in any auto store)

caveat emptor.....they're only good for parts....but I'm sure there will be plenty resold as a reg used auto.

[-..__...]

12. Put another way...

Thing is, the CarFax report will only show reported damages (either through the DMV or insurance company).

The cars being auctioned are being sold off as flood damaged.

However, even if the cars weren't titled as flood damaged vehicles, I'd be very cautious about buying any vehicle that was registered in NOLA during the time Katrina hit.

[Child_Of_Isis]

2. .By reselling those vehicles for parts

Right. :eyes:

[trogdor]

4. Why not?

You get these cars for pennies on the dollar, and then you strip off the reusable body parts. That's probably a better deal than reselling the whole car. I don't care how much you clean them up, you won't be able to sell more than a handful of these cars whole.

[LostinVA]

5. Oh, but they will -- many won't be used as parts

By bought by naive buyers....

[Child_Of_Isis]

6. By bought by naive buyers

and poor people who have to purchase vehicles at "Buy here pay here" rip off spots.

[toopers]

11. Why do you claim that buy here, pay here lots are rip offs?

NT

[Maddy McCall]

14. I KNOW they are.

One of my friends used to manage one. Say he sold and financed a car for $50/week. Say the car (usually worth half of what he sold it for) was sold for $5000. If the purchaser made payments for two years and had paid off $4800 and missed a payment, he would send his repo man to go pick up the car. That nulled the contract, he had $4800 dollars in his pocket and the car back, which, the next week, he would sell AGAIN for $4000.

Now, I don't know about cash lots, where you go in with the cash and pay for the car in lump sum. But I do know that car lots that sell and finance ARE rip offs. I've seen one in action.

In Mississippi, most people don't have $5000 in savings to go buy a car. They have to finance on these lots. Sadly, many of the cars from NOLA will be placed on Mississippi lots like the one I mentioned above, and POOR people will buy the cars and all of the problems that accompany them.

My friend, that I mentioned above, acquired most of his cars from auctions. He would pay $1200 for a car and resell it for $6000. How was he able to do this? By financing the car at $50 a week from some naive and desperate buyer.

[drb]

7. Well, both points are true, but it depends on the vehicle....

Newer vehicles may be worth much more as parts; older vehicles don't have as much demand for parts and thus are more likely to be sold whole at "buy here pay here" lots to poor and unsophisticated buyers.

[pitohui]

9. newer flood vehicles can be repaired

the hub's vehicle was in a flood when it was only a few months old, repaired under his comprehensive insurance, he has put 50,000 miles on it since & not a peep of trouble out of it

you do have to REPLACE the computer & other electrical parts, his insurer paid $5K to re-build the car

i would not knowingly buy a flood vehicle but i suspect the auctioneer or insurer does repair & sell plenty of these, and not just for parts, i understand insurers are quite active abt claiming cars have been totalled, seizing them for a derisory settlement, and actually selling them at a profit in mexico, rumor or fact, i dunno, but i do know i've heard some awfully low settlements being offered for totalled cars

[Jose Diablo]

10. I wouldn't buy a used car for a few months

Even checking carefully, you can never tell if vehicle IDs have been swapped with a wreck. It doesn't matter all the checks that are put in place to stop fraud. For the fraudster, there is always a way around it.

[kcass1954]

13. Auto auction employee here...

We do sell flood-damaged vehicles. Our corporate policy mandates that we announce this if we know it.

"That auction is closed to the general public." - The dealers are made aware of the status of the vehicles, but they may not disclose that information to their retail buyer.

"The vehicles, all clearly titled as flooded vehicles" - The problem here is that when you buy a car, you normally do not see the title. The dealer asks you to sign a POA, and his title clerk takes care of it. If you finance the purchase, you may not see the actual title until the vehicle is paid off.

Carfax does perform a service to the consumer, but you need to be aware that they are not always correct. I spend several hours a month researching Carfax problems so they can be submitted for correction.