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Posted: 10:05 a.m. Thursday, July 26, 2012

Protect yourself, used car buyers!

By Clark Howard

I've talked in the past about how we have a scandal in this country where auto insurers will look the other way after a big flood and sell flood vehicles to people who wash the title. Those people then resell the cars as if they've never been in a flood in the first place.

Unwitting buyers wouldn't get taken by this ploy if they'd just run a vehicle VIN through the National Motor Vehicle Title Information System (NMVTIS). Of course, fewer buyers ever do that.

So California has come up with a law I love. They're requiring dealers to first run the VIN of any used car they want to sell through the NMVTIS before putting it on the lot. This check reveals not only flood cars, but cars that have been totaled, salvaged, or Lemon Law-ed out by the insurance industry.

A car that gets flagged by the NMVTIS will have a big red sticker of shame on it when you see it on the dealer lot in the Golden State. What a brilliant, simple system to warn people away from these stinkers.

I would love to see a similar requirement on dealers in all states, but they have among the most powerful lobbyists in most state legislatures and that will probably never happen.

The sad reality is that a used car seller -- whether a dealership or a private individual -- is legally allowed to lie to you about a car in most states. So don't take their word about a vehicle.

Instead, what you have to do is run a vehicle check like CarFax and make inspection of the car by an independent diagnostic mechanic of your choice a condition of the sale. If a used car dealer says "no" to that last request, you know they're hiding something.