Right after Hurricane Sandy struck the New York/New Jersey coast, I explored the good, the bad, and ugly effects of the storm from a financial perspective. In the past few months, though, it’s become clear that the long-term ramifications of this mega-storm could impact your household – and, more accurately, your garage – for months, even years, to come.
Take A Look At This Picture
Take a second to click on the link to this picture from the New York Post. Not quite sure what you’re looking at? It’s not bumper-to-bumper traffic through midtown Manhattan, but 15,000 cars parked on a private runway on Long Island. Each one of these cars was declared a total loss by the previous owner’s insurance company following Hurricane Sandy. They represent just a small fraction of the number of cars deemed “undriveable” after the storm – as many as 200,000, according to the Post.
What will happen to all these vehicles? Right now, they’re all owned by the insurance companies that sent them to the junk yard (or in this case, the air field). Some are true losses and will be, at best, scraped for usable parts. Others will be sold by the insurance companies on the used car market.
Can you say, send me a CARFAX?
How These Used Cars Affect You
Going used car shopping in the near future? Then there are two things you need to know:
First, in the short term at least, expect used car prices to soar. U.S. News and World Report estimated used car prices could jump as much as 1.5 percent, as victims of Hurricane Sandy receive insurance payments for the loss of their old vehicles and head to the used car lot to purchase a replacement vehicle. Some of my friends have seen this firsthand; even friends who live hundreds of miles from the impact zone told me they’d received letters from their local car dealerships telling them that now was the time to get top value for their used car.
But the second, and more insidious, after-effect of Hurricane Sandy will be felt for years to come. It’s likely many of these totaled vehicles will end up back on the used car market, where you may run across one without even knowing it.
Doing Your Research
Federal law requires used cars declared “totaled” by insurance companies to be listed on a national database. While this should be enough to protect would-be used car buyers, there are ways around this. Some crooked dealerships may move a totaled vehicle to state after state after state in a process known as title washing; the goal is to move the vehicle around so much, so widely that some of its most negative aspects are “washed” off the title. Other scammers may try to switch vehicle identification numbers, make it impossible to locate the car on a nationwide registry or get an accurate CARFAX report on it.
If you live in the Northeast – in closest proximity to all these water-logged used cars – you’ll have to be on the highest alert. Ask to see a used car history before purchase, and consider taking the vehicle to a third-party inspector – someone who is in no way affiliated with the seller – if you suspect anything fishy. Common signs of water damage are water lines on the interior or exterior of the car, a rusted undercarriage, water condensation inside the head- or taillight compartments, or a foul, moldy odor.