The rules for buying and selling a car vary from state to state. In most cases, when you sell a car, you do not have to disclose minor damage that has been repaired. However, if the car sustained major damage, or was declared a total loss by the insurance company, you may need to tell the dealer that your car was in an accident and repaired when you trade it in or sell it outright.
Giving Full Disclosure
Your state's laws may require you to give full disclosure of an accident when selling your car, even if the damage was minor. Some jurisdictions have specific disclosure guidelines, dependent on the age of the car and the amount of impact on the fair market value. If your car's damage did not decrease the fair market value beyond the limits, you would not need to disclose the accident when trading in the car. However, should the dealer ask about concerns that the car was damaged, be forthright and tell them what you know. If they are concerned, they likely will run a vehicle history report that will disclose that the car was damaged and repaired, so failure to disclose will likely hurt your credibility in negotiations.
If your car was damaged to the point of being considered a total loss by the insurance company, you may be able to get the car repaired and drive it under a salvage title. In most states you must disclose that your car has a salvage title when negotiating the trade-in. Car insurance companies report totaled vehicles to the National Motor Vehicle Title Information System, so if your car was totaled, the vehicle identification number would be flagged as such on a vehicle history report.
Damage from Flooding
Some states have specific requirements for damage disclosure if your car was partially submerged in water during a flood event. Damage to the engine, drive train, body or interior may be able to be repaired, but that won't divest you of your requirement to disclose this fact when trading in the car. Depending on the state's laws, a flood-damaged car may require a salvage, flood or water-damaged title.
Rebuilding a Car
If a car was damaged but not to the point of being totaled, the owner may choose to rebuild the car for sale. This typically involves major replacement of parts such as a roof assembly, rear clip or front cowl assembly. After the car passes inspection, the state may assign a rebuilt title to the car. If you wish to trade in a car with a rebuilt title, be prepared to disclose the full nature of the repairs, and expect that the dealer will thoroughly inspect the repairs and will probably give you a low offer. In this case, you may get a better offer by selling the car outright to a private buyer who understands he is buying a rebuilt car than by trading it in to a dealer.
- MSN Money: Clean Car Title But Dirty Secret?
- National Association of Attorneys General: Clearing the Road of Flood-Damaged Vehicles
- CarInsurance.com: What is a Rebuilt Title or a Salvage Title?
- North Carolina Department of Justice: Disclosing Car Damage
- MSN Money: Driving Your Car After It's Totaled
Chris Baylor has been writing about various topics, focusing primarily on woodworking, since 2006. You can see his work in publications such as "Consumer's Digest," where he wrote the 2009 Best Buys for Power Tools and the 2013 Best Buys for Pressure Washers.