The term ‘written-off’ strikes fear into the budding motorist, but what can it actually mean, and is it okay to buy or sell a written-off vehicle?
- Can you buy a written-off vehicle?
- How to insure a written-off vehicle
- Can you finance a written-off vehicle?
- How to check if a car has been written off
- Risks of buying a repairable write-off
- Selling a repairable write-off
- Insurance & finance when your car is written off
There are different levels of written-off vehicles. The one this article will cover is a repairable write-off which, as the name suggests, is a car that has experienced a significant prang or damage before being repaired and sold again, with the repair cost outweighing the car’s market value. But what are you getting yourself into with buying or perhaps selling a written-off car? The guidelines can vary by state, and there are certain insurance and finance implications you may want to keep on top of.
Can I buy a written-off vehicle?
The short and skinny of it is that you can, in many instances, buy a vehicle that has been declared a repairable write-off. A 'statutory' write-off essentially means that the insurer has deemed the car to have been damaged too much to bother repairing - this can happen through a crash, flood, hail or other weather events - and should not be sold again. A repairable write-off, however, is one that has been salvaged and repaired, and that the cost of this exceeds its market value.
For example, a repairable write-off may happen on a $5,000 Honda Jazz that was repaired at a cost of $6,000 to the insurer.
The laws around buying a repairable write-off can differ by state - which we will get to later - but there are a few things that could affect your car-buying decision. The two big things are being able to insure and finance a repairable write-off.
How to insure a written-off vehicle
Nothing is fundamentally wrong with buying a repairable write-off, but you may find that it could be either tougher or more expensive to insure.
Another thing that affects a car’s viability is its roadworthiness - a car that has failed its roadworthy test can’t be insured until the items listed for repair are fixed. Obtaining a roadworthy certificate varies state by state, and legally it’s up to the seller to provide one in many instances, so it pays to do your research here. You are usually required to dutifully notify your insurer of any existing damage and your car’s roadworthiness before they allow you to take out a policy - not doing so could void your insurance.
Can I finance a written-off vehicle?
A repairable write-off that’s roadworthy in your state should be able to be financed, either through a secure or unsecured loan. As a repairable write-off car may be sold at a cheaper price than other similar cars, theoretically you could be paying less per week on the loan, but the financier will take into account your credit history, loan amount needed, your risk profile and other considerations.
The table below displays some of the cheapest fixed-rate used car loans on the market.
Data accurate as at 17 March 2020. Rates based on a loan of $30,000 for a five-year loan term. Products sorted by advertised rate, then by company name (A-Z). Repayments are calculated based on advertised rates. View disclaimer.
How to check if a vehicle has been written-off
It’s generally a good idea to do all the checks and balances before purchasing a car, as a particular model can look and drive fine, but you may not know what’s lurking in its history. The main service used to determine if a vehicle has been written-off is the Personal Property Securities Register (PPSR).
- The PPSR report can cost just $2, but be aware of third-party sites charging extra for the same thing.
- The report should detail if a car is listed as written off/stolen - all you need is its VIN.
Stolen cars - particularly expensive ones - also often undergo a ‘rebirthing’ process, which sounds like something from the lexicon of a born-again Christian. Rebirthed cars are often wrecked, stripped and ‘reborn’ under a new identity, bamboozling any potential new owner and producing a profit for the shady cats that do the rebirthing.
- The PPSR likely won’t identify that a car has been rebirthed, which is where the ‘Written-Off Vehicle Register’ (WOVR) comes in handy.
- For $37 (at the time of writing) - from CarHistory by Equifax - the report provides information on a vehicle’s insurance claim history, stolen/write off history, valuation and rego details. Still, it only covers cars 15 years or younger, so it doesn’t list all cars.
The PPSR and WOVR can both provide valuable insight into a car’s written-off or stolen history. While $40-odd may seem expensive, it could save you from a world of hurt in the future.
Potential risks of a repairable write-off
There are many things to consider when buying a vehicle that’s declared a repairable write-off. If you see a car for sale that’s significantly cheaper than the competition, there’s every chance it could have been written-off at some point in its life.
- While a write-off can happen due to a crash, it is also commonly due to flood or hail.
Even if a car has been repaired professionally, it’s almost never going to be as good as it was when new or when compared to its compatriots for sale online. Risks can include less structural rigidity or integrity, ongoing problems in the case of a flooded car, paint erosion and rust problems due to hail and more.
A statutory write-off should not be sold under any circumstances, and to ensure a car has not been declared so, and rebirthed or stolen, it can be a good idea to do the CarHistory report on top of the PPSR report. Also be aware of repairable write-offs from NSW being shipped off and sold up interstate. Overall, chances are by saving a few dollars more or even at the same price, there will be a secondhand model of the same car that hasn’t been written-off, so it’s handy to shop around and not jump at the first good deal you see - that good deal might not be so great after all.
Selling a repairable write-off vehicle
In selling a written-off vehicle, there are a few things you should know, but it varies state by state, so we’ve broken it down below.
It is legal to sell a repairable write-off vehicle in Queensland and legally you do not need to tell the prospective buyer. Provided it has been repaired, passed inspection and roadworthy, and can be registered, it is treated just like any other vehicle on the road. This is the case for many states, excluding NSW.
New South Wales
Since 2011 it has been illegal to sell a repairable write-off vehicle in NSW, and similarly illegal to drive one except in limited circumstances. This was introduced to curb the stolen vehicle/rebirthing market whereby vehicles are stolen, written-off, repaired, re-identified and sold on to the unsuspecting consumer. This has also led to repairable write-offs in NSW being re-registered in different states where it is legal to do so. This is mostly at the hands of insurers selling repairable write-offs to interstate auction houses, which are then snapped up by buyers.
Repairable write-offs can be put back on the road provided they are repaired to the manufacturer’s standards, while also obtaining a VIV certificate and a roadworthy certificate. VIV stands for Vehicle Identity Validation, which is an inspection that a damaged vehicle is safe to be back on the road.
South Australia is another state allows repairable write-offs back on the road, provided they pass inspection and roadworthy, and have been registered. It may also be allowed to be on the road if it has an unregistered vehicle permit, displaying a trade plate or if the purpose for its trip is to be driven for repairs or inspection.
In the west, repairable write-offs can be back on the road provided they are the following: repaired, passed their safety inspection, and passed a written-off vehicle inspection (WOVI).
Like many other states, in Tasmania you can put a repairable write-off back on the road provided it passes inspection, its roadworthy and a vehicle identity check.
In the NT you can re-register a repairable write-off provided the vehicle passes roadworthy, has a VIV and a stolen motor vehicle (SMV) check completed.
Australian Capital Territory
To get a car back on the road after a repairable write-off in the nation’s capital, there are a few steps you need to do, like other states. The ACT Government requires: a roadworthy certificate, vehicle identity inspection, proof of ACT garaging address, proof of identity, proof of acquisition and the previous number plates allocated for the vehicle. The RTA refuses an application to register a repairable write off if the vehicle was not registered in the ACT or without proof of the vehicle’s ACT garaging address.
Can dealers sell written-off vehicles?
In most states, except for NSW, it is legal for dealers to sell repairable write-off vehicles, but the write-off status must be disclosed to the prospective buyer. For more information, it is useful to check with your state’s relevant motoring authority.
Insurance and finance when your car is written-off
If your car is written-off while it’s under finance, it is generally a condition of your financier that you pay out the remainder of the loan. After a vehicle is declared written-off, your insurer can decide to pay your financier out, and not you directly. In some cases, there may be a shortfall in the amount the insurer pays out, and how much is left on the loan, as the insurer has assessed the vehicle’s market value to be less than what you owe on the loan.
- To avoid this shortfall, on a financed vehicle you can usually take out ‘motor equity insurance’, which is a policy that covers this shortfall, or you can with some insurers insure for an ‘agreed value’, where you can make the agreed value equal to the loan amount.
It is important to note that there are lots of ways insurers assess a car’s market value, and depreciation usually plays a big part in this. If your vehicle is financed, it can be useful looking at your options to ensure you aren’t out of pocket if you write off your vehicle.
Saving.com.au’s two cents
There’s a lot to consider when buying a secondhand car - a potential repairable write-off only throws a spanner in the works. While repairable write-offs can often feature a very enticing price, you’ll have to consider what you could be really paying for - a lesser quality car teamed with potential ongoing issues, repair bills and more. Our suggestion is to look for another example, but if you’re determined on that particular car, it can be a good idea to do all the checks and balances and get a good price.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states.
In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $30,000 loan over 5 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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