Does a Stolen Car Lose Value?Interesting & Valuable things you should know
Obviously, the value of a car that’s been stolen and recovered will be lower than a similar model with a clean title, but if the car hasn’t been damaged in any other way, buyers may be able to get an excellent deal on a used automobile.
Most of the Pre-owned automobiles have a history, and that history isn’t necessarily rosy.
Pre-purchase vehicle history checks should be performed on all used vehicles since they can reveal information that the seller does not want you to know.
This could be revealed by looking at the title history, but what should you do if it does? Does a stolen car loose value compared to an identical vehicle that hasn’t been reported as having been stolen before?
Also read: Is it suspicious to buy a car with cash?
How much of a car's worth does it lose when it is stolen?Value of stolen/recovered car
According to Kelley Blue Book, a previously stolen vehicle with a salvage title is normally worth between 20% and 40% less than a comparable used vehicle with a clean title.
However, and I cannot emphasise this enough, you should always have a stolen and recovered vehicle independently appraised by an expert before parting with your money to purchase it.
Even if one of these vehicles appears to be in excellent condition, there could be a variety of issues occurring beneath the surface that an expert check would reveal.
What does it mean when its is a stolen and recovered vehicle?
A stolen and recovered automobile is one that has been reported stolen to the insurance company and law enforcement by the vehicle’s legitimate owner but is later located and returned to the owner.
Crucially, though, not all stolen vehicles are identical, and you must understand the specifics of the scenario before committing to purchase one of these vehicles.
When an owner’s vehicle is stolen, the owner notifies their insurance company and law enforcement.
If the vehicle is not located and recovered within the time period specified by the auto insurance company, the owner will get cash within a short period of time.
Depending on the insurance company’s policy regarding the stolen vehicle’s title, the title may remain CLEAN or may be converted to a SALVAGE title.
Vehicles that have been stolen but retain their original Clean titles
Depending on the insurer’s policy terms and conditions and the time period between when the car was reported stolen and when it was recovered, the vehicle may keep a clean title or be changed to a salvage title.
Insurance companies will compensate the insured owner of the stolen car for their loss if the vehicle is not located and recovered within a specified period of time, which varies by insurer.
If you’re unsure how long this period is included in your policy, I strongly advise you to check your policy or contact your insurer, although it’s typically around 25-30days or Four weeks.
If a stolen car is recovered within the time period specified in the insurance policy, it retains its clean title as long as it is in the same condition in which it was stolen.
If the car is recovered but has been damaged or wrecked by the thief, the insurance company will examine the damage and decide whether to write it off or restore it.
As the owner of a stolen car that has been found and returned to you, getting it back within the time frame required to maintain a clean title is good news because it will not affect the vehicle’s resale value.
On the other hand, if the vehicle is discovered and retrieved after the period has expired, the insurer may pay out as a “total loss,” leaving you out of money.
If you have GAP (Guaranteed Asset Protection) insurance in addition to your auto insurance policy, it will cover the difference between the amount paid by the insurance company for a total loss and the price you paid for the car originally.
A vehicle that has been stolen and returned with a clear title is valued the same as it was before it was taken, unless it has been damaged by the criminals and the insurance company has paid for repairs.
In that situation, a vehicle history check will reveal that the car has been in an accident, which will detract from the vehicle’s resale value.
Vehicles stolen with salvage titles
If a vehicle is stolen and recovered but the insurance company pays the owner for the loss because it occurred outside the policy’s stipulated term of coverage, the recovered vehicle becomes the insurance company’s property.
The insurance company will then sell the vehicle in order to recoup some of the money paid to the original owner, but the vehicle will be sold under a salvage title.
Even if the stolen and recovered vehicle is in perfect condition and has no flaws, save for the fact that it was stolen and then recovered, it will have a salvage title. Regardless of its condition, the vehicle will be far less valuable than it would be with a clear title.
However, I must inform you that the vast majority of stolen and recovered automobiles will have been involved in an accident of some sort and will have sustained damage to varied degrees.
In this situation, the insurance company will sell the vehicle to businesses such as auto repair shops who will fix or even rebuild it if necessary and then resell it at a profit.
Are salvage-titled automobiles dangerous?
When purchasing a stolen vehicle with a salvage title, it is frequently a wise option. When an automobile is reported stolen for three weeks (or 30 days in some circumstances), the owner’s insurance company will pay for the vehicle’s cost.
The vehicle is subsequently classified as a “complete loss.” When a car is discovered and retrieved, it is renamed a “salvage” vehicle. This results in some salvage cars being completely undamaged.
Not every salvage title is same.
This is the point at which things become extremely difficult. Each state has its own salvage title legislation, which means that a car that obtains a salvage title in one state may still qualify for a clean title in another.
This complicates your life as a used car buyer, and is another reason why you should always obtain a vehicle history report prior to purchasing a used vehicle.
You see, there is a process called “title washing” that you should be aware of. It involves unscrupulous auto sellers moving vehicles to states with relatively liberal restrictions regarding salvage title cars, such as New York or New Jersey.
They purchase a damaged car cheaply as salvage in one state and then transport it to another where it will qualify for a clean title after being repaired due to less severe requirements.
Obviously, as a car with a clean title in the new state, it will command a significantly higher price than it would have in the original state, where it would have had to be sold with a salvage title.
Should you purchase a vehicle that has been reported stolen?
You should only consider purchasing a stolen and recovered vehicle if you are certain you understand what you are doing or are accompanied by someone who does. There is a possibility that you could score a bargain on a used automobile, but you could also lose your shirt.
If you’re looking for the best deal on a used automobile with the least amount of danger, government and police auctions may be the way to go. To purchase at any auction, you must know what you’re searching for, but this book is an excellent resource for finding used vehicles at unbelievable rates.
Investing in Recovered Vehicles
The original purchase price of a stolen and recovered vehicle can save you thousands, but it is not the only benefit.
Purchasing a stolen and recovered vehicle can frequently result in the purchase of a newer vehicle with more choices… all at a lower price than the clean-titled counterpart!
Additionally, stolen and recovered automobiles depreciate more slowly than typical vehicles due to their diminished worth.
If the clean title car acquired for $35,000 was projected to depreciate $5,000 over a certain time period, the stolen and recovered salvage title vehicle purchased for $29,997 and already saving $5,000 on the purchase price would have depreciated by just $4,000 over the same time period!
That is, when you are ready to sell it, it will maintain more of its worth than a car with a clean title AND you will have saved $7,000 over purchasing the vehicle with a clean title after depreciation.
What do I do if I buy a salvage vehicle that has been recovered from theft?
Have the car examined by a competent technician following your purchase. Additionally, take the vehicle to a body shop.
While the car may appear to be in good condition, it may have interior damage that requires repair. While the majority of jurisdictions prohibit salvage vehicles from being driven on the road, it is not difficult to re-title a vehicle following a thorough check.
Each state has its own requirements for converting a salvage title to a non-salvage title.
In general, you will require a confirmation of the vehicle’s identification number, title and registration papers, photos, insurance company damage reports, and bills of sale. These forms and applications may require a notary or an inspecting law enforcement official’s signature.
I discovered that the automobile I purchased had been stolen and never recovered. What am I to do?
If the vendor of the vehicle is unable to present a registration document (V5C), it is possible that the vehicle you purchased was stolen.
Certain car thieves will modify the pre-existing V5C. Check for spelling errors, watermarks, and that the name and address correspond to the other information provided to you.
While purchasing a stolen vehicle is a felony, authorities are unlikely to arrest you if you were unaware the vehicle was stolen.
If you want to sell the stolen automobile and reclaim your money, you must take the seller to court. You may lose track of the vendor if he or she used a false identity. If you are able to locate the vendor, have an appointment with a legal professional prior to initiating proceedings.
If you want to keep the automobile, a court will determine whether you may keep it, and it will almost certainly get impounded.
Whatever you do, do not conceal the automobile if you are aware it has been stolen. If the former owners discover their stolen vehicle, authorities may charge you with theft.