Buying a Repaired Write-off

Dodgy used cars cost Australians more than half a billion dollars every year.

It’s big business.

So here’s how to sidestep ‘rebirthing’ and other used used car sales scams - by making sure you don’t unwittingly drive away in a repaired write-off.

Jump down to read one owner's experience with his repaired write-off >> (He had no idea until trade-in time...)

This report is inspired by Stephen (right) who contacted me via the website: He’s thinking of buying a 2014 Kia Rio that’s a repaired write-off - effectively 40 per cent below fair market value for the equivalent used car. So: it’s above board - but is it a good idea?

A repaired write off is the six million dollar man of used cars. Only it’s not better, stronger or faster. The best you can hope for is that it’s almost as good, and a lot cheaper. So here’s how to make sure you get what you actually pay for.

Related: Should I buy a dealer demonstrator? >>

Don't get ripped off - click here for John Cadogan's essential Used Car Checklist!

Don't get ripped off - click here for John Cadogan's essential Used Car Checklist!

What is a repairable write-off?

Repairable write-offs happen when insurance companies declare a vehicle uneconomical to repair. This might be following a crash, or some other insurance event like a flood, or severe hail. The owner cops a cash payout or a new replacement vehicle - whatever the policy stipulates - and the wreck is generally sold at auction.

Depending on how crappy the condition, that wreck might go to a wrecker - who strips it and sells the parts. But if it’s only partly crappy it might end up repaired, inspected, re-registered and re-sold. 

Because YouTube is a global platform, and I live in Australia (the perfect environment for the descendent of a British bread-stealing criminal) you should be aware I can only comment on the repairable write-off situation down here, where the coriolis acceleration of the earth turns hurricanes into cyclones by forcing them to rotate in the other direction.

Related: Do we need tougher lemon laws? >>

Buying a repaired write-off

Nothing is intrinsically wrong with repaired write-offs, provided the repairs are done to a professional standard. But I wouldn’t be paying the full freight for one. I’d want a discount for the abuse it’s suffered in the past. It's only fair.

There are scumbags out there, with the underlying ethics of a death adder, who routinely attempt to pass off these repaired write-offs as run-of-the-mill used cars - at the full market price. So you have to protect yourself from inheriting one of these without the appropriate discount. We’ll get to that.

In Australia, there are essentially two categories of written-off cars: Repairable write-offs and statutory write-offs. Statutory write-offs are the ones that, by law, must never be repaired. They’re usually badly damaged, and they can only be sold legally for spare parts. (Although there is an even lower class of bottom-feeding scumbag who will repair and attempt sell you a statutory write-off, purporting to be a high-quality used car.)

NSW, repaired write-offs & stolen car 're-birthing'

Here in NSW, which is where Sydney is (if you're reading this from overseas) the state government made it illegal in 2011 to re-register any repaired write-off. Here, they can only be scrapped and sold for parts. That was done in an attempt to reduce re-birthing.

If you haven’t yet got your PhD from Criminal University, re-birthing is where you steal a car, you park it somewhere unobtrusive and then you buy a wreck of the same make and model. Then you transfer the wreck’s identity to the stolen car and attempt to sell it as if it’s above-board. Whole new identity. Jason Bourne … without Treadstone. Re-birthing is just like the automotive equivalent of cloning … if it were the Armenian mob doing the science … as opposed to actual geneticists.

This set of ‘zero tolerance’ write-off repair rules only applies to NSW. Other Australian states still allow you to repair and re-register repairable write-offs. There’s even an official inspection process to get them re-registered and back on the road. But the unique laws in NSW mean legally repaired and re-registered write-offs from other states can’t be transferred to a NSW registration. So bad luck if you plan on moving here with one of those.

How to protect yourself

Most people buying a used car in Australia do a REVS check, which reveals financial encumberance. It’s bad to buy a vehicle used as the security over a car loan - because it can be repossessed if the loan isn’t discharged with the sale proceeds. But a REVS check won’t identify repaired write-offs.

In Australia there’s an official Written-off Vehicle Register. And the best way for you to access the data on that register is to drop $37 online and get an official Car History Report. In addition to the financial liability check from REVS, a Car History Report will also give you the vehicle’s full insurance claim history, it’ll tell you if it’s ever been stolen or written off, you’ll also get a valuation and the registration details, plus a bunch of other sundry information. It could just be the best $37 insurance policy of all time.

Online rescources: REVS -Vs- CarHistory

Above, left to right: REVS check (L) and Car History check (R) - Carhistory tells you about written-off and insurance issues in a car's past; REVs doesn't

To get a Car History Report, you’ll need the vehicle’s VIN code - a 17-digit alpha-numeric code (effectively a serial number) located on an official plate in the engine bay or inside the door frame. You should also check that the code on this plate matches the code on the rego papers exactly. So, when you’re inspecting a used car, bring a flashlight and a rag with you - because engine numbers are sometimes dirty and sometimes hard to see deep in the engine bay - but it’s worth the effort making sure the physical VIN code and engine number match the ones on the registration paperwork.

Related: How to test drive like a pro >>

Nobody who watched this movie would ever mess with your mechanic

Nobody who watched this movie would ever mess with your mechanic

Your mechanic can help

The other thing you really should do, no matter where you live on Earth, is get your own trusted, independent mechanic to inspect the car - not only for its mechanical health, but also for evidence of major repair work. Especially dodgy crash repair - which is easy to spot if you know what to look for. Flood damage is another common cause of repaired write-offs - and that leaves telltales that a trained mechanic will spot … in addition to a ‘high tide’ mark halfway up the doors, and water under the carpet in the footwells.

Related: How to tell if a mechanic is ripping you off >>

Insurance & warranty

If you buy a repaired write-off, you need to tell your insurance company that’s what it is. It’s part of your duty of disclosure to tell the insurer anything that materially affects their decision to insure you. The final thing you need to do is clarify the vehicle’s warranty status with the manufacturer. This is especially important for reasonably new cars, like the 2014 Rio that Stephen’s sniffing around, which sparked this report - don’t just presume the balance of the factory warranty protects you because you might find that the factory warranty is null and void as a consequence of being written off.

Related: More detail on used cars & warranties >>

CONCLUSION

Finally: should you buy a repaired write off - even if it’s legal, and above-board? If everyone could afford a new car, used cars would be stacked 100 high at the junkyard. And if everyone could afford a late-model used car, nobody would ever repair a write-off. The fact is, they exist because there’s a market. Just don’t kid yourself they’re as good as a car that’s never been written off. Crash repaired cars tend to rust, flood damaged cars are prone to mechanical problems. Severe damage is hard to fix. You get what you pay for.

I OWNED A REPAIRED WRITE-OFF AND HAD NO IDEA

QUESTION

Hi John,

Many thanks for answering my call on the radio yesterday. I hope you be able to help me so other people that go to this dealer in future will not be ripped off. I will try my best to explain it to you.

On Monday I went to this dealer to get trade-in/valuation for my 2004 Nissan X-TRAIL in the process of buying the new Camry Altise for $26,990 drive-away, which was advertised on the TV and in the newspaper. I signed the new vehicle contract and put $1000 deposit down, with $8000 trade-in. On Tuesday, me and my wife paid the remaining balance in full to the dealer and we were told we would receive our new Camry on Friday.

I rang the dealer on Thursday to confirm and was told our new car was already in the yard and would be ready on Friday, and I was given the rego and VIN.

On Friday I arrive at dealer. After I signed the contract etc., just under a minute later the dealer pulled out this PPSR certificate saying my X-TRAIL was a repaired write-off back in 2008. I was upset because I did not know this, and I ask why they tell me now. I was told to pay another $4000 and if I pull out from the deal I will loose $2400 to the dealer.

In the end I paid an extra $1000. Unhappy, so next day I rang Toyota head office and was told my new Camry was a demonstrator car and registration already started on December 30 and warranty started January 24. (I collected the car on January 10.)

I called again Toyota head office and also the dealer, and was told there's nothing I could do. How terrible feeling my wife and myself to have been done by the dealer and also Toyota head office customer service. The next day I went to a solicitor for a free 10-minute appointment and she pointed out that my first contract heading was New Vehicle Contract and my last contract heading was Demonstrator Contract. She also pointed out that my X-TRAIL VIN in both contract are not correct. If I take it further with the solicitor it will cost me at least $5000. 

Hope to hear from you with any advice.

Thanks in advance,
Ben

ANSWER

Ben,

Your story reads like a 'how not to buy a car' epic. Let me skim over the details and cut to the chase.

VIN code and rego details are cross-checked in the PPSR process, so I guess this issue really boil down to whether or not your vehicle was correctly identified as a repaired write-off or incorrectly identified as one by the dealer. Let's assume it is a repaired write-off.

If your old X-TRAIL was in fact a repaired write-off, its value is basically just scrap. So, you've rid yourself of this dud X-TRAIL, which is worth basically nothing (because technically it can't be registered in NSW - and who would want one?) and it's cost you $26,990, plus $1000, minus your $8k trade-in. Let's call that $20k. Instead of a brand new Camry, you got one that is 11 days old (from first registration).

So let's talk about your Camry - the rego started on 30 December if it's a demonstrator as you claim. You picked it up 11 days later. So, it's a brand new car, minus 11 days, and (possibly, but probably not) a few test-driving kilometres. So, in terms of the warranty, you have the full three-year warranty minus about 11 days. Big deal.

I think overall that this is actually a good deal for you, because there's no way on earth you'd get $8k for that X-TRAIL if in fact it's a repaired write-off.

What outcome do you hope to achieve if you take legal action? "At least $5k" means it'll probably cost you $7-$10k for the legal fees. You haven't incurred damages of anything like that. If you think the dealership is going to give you a $5k adjustment, you'll still be $2k out of pocket, or something. I think the dealer may not have handled you diplomatically, but you're already sounding like you're in front - or at least, not been ripped off. That repaired write-off is a liability, and you're well rid of it. Enjoy the new car.

Technically it's a demonstrator, but really it's a new car. (Dealerships regularly get told to register a bunch of cars by December 30 because it pumps up the sales figures. Official sales figures are actually tracked by first registration, so demonstrators are a way for carmakers to cook the books on sales data, and December 30 is the classic day to do this. I think you're in front.

HERE'S WHAT YOU SHOULD'VE DONE

I know you can't go back in time and change things, but this will be a salient lesson for anyone who is buying a new car today.

  1. Don't put more than $500 deposit down. Ever. Especially on an unpopular car like a Camry. The dealer has trouble shifting them, therefore, you can set the terms of trade. They are gagging for your business, so you get to tell them how much deposit you're prepared to put down. This way, should you decide to back out, the most you can be out of pocket is $500.
  2. NEVER - NEVER - pay the balance until the car is right there in front of you, and you're totally happy with it. You wouldn't pay a tradie the whole cost of the new bathroom up front, would you? Same thing here. Money is the only leverage you have. Once you hand it over: No more leverage. Pay it at the very end of the deal.
  3. Why deal with the dealer? It's always a headache. Use my brokerage broker. We do all the heavy lifting. We save you thousands. We insulate you from all mongrel dealer antics. I have helped hundreds of car buyers - just fill in my CONTACT FORM. It's that simple. New car delivered to your door. Full tank of fuel. No face-to-face time with the dealer. Trade-in also handled seamlessly. No rip-offs. Easy. Everyone wins.
  4. I'm curious to know how you ended up with a repaired write-off. You must've bought the X-TRAIL used. If you buy a used car, always get the 'works burger' PPSR checks (Personal Property Securities Register). Go to https://transact.ppsr.gov.au/ppsr/QuickVINSearch to start this research. I also have a used car checklist to help used car buyers through the process.

However hard I look at your account of events, Ben, I don't see you've been monumentally wronged here.

Sincerely,
John Cadogan

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