Show me the Carfax.
Remember when those commercials first hit the airwaves? It was only a matter of time before dealerships everywhere started touting a Carfax report with every used car.
The reports promised an almost crystal ball view into the history of a vehicle. Sellers could no longer hide accidents, major repairs or faulty odometers. It’s all in the Carfax!
Or is it?
Money Talks News personal finance expert Stacy Johnson takes a closer look at Carfax, plus what else you can do to protect yourself when buying a used vehicle. Watch the video and then keep reading below for more details.
How trustworthy is Carfax?
Certainly, we don’t want to imply Carfax is a bad thing. However, we do think used-car buyers need to realize a Carfax report is not the word of God. It can be a useful tool, but it has its limitations.
Carfax reports glean data from a number of sources. Those include these, among others:
- U.S. and Canadian motor vehicle agencies.
- Collision repair and service facilities.
- Insurance companies.
- Auto auctions, salvage auctions and auto recyclers.
- Fire and law enforcement agencies.
- Manufacturers, dealers and import/export companies.
This data is then compiled into reports that indicate title transfers, odometer readings, manufacturer recalls and whether the vehicle has been reported stolen. In theory, it should also say whether a vehicle has been in an accident or needed significant repairs.
However, this last point is where the Carfax report may fall short. Carfax might not know about the time the car went into the ditch or backed into a tree. It won’t be aware of repairs made by someone at home or at a shop that doesn’t report to them.
They’ll also tell you some practically totaled cars have clean titles, which they have, and the accident may not even appear on the report. It’s not because they’re dishonest. It’s because they probably don’t know. We’ll let Consumer Reports explain how that happens:
We found that the reports were most likely to be incorrect for vehicles that had serious damage but for various reasons were not declared a total loss.
“Salvage,” or similar branding on the vehicle title, is required by many states for vehicles with extensive damage. Wrecks can maintain clean titles if the vehicle doesn’t have collision insurance, is self-insured as with many rental and fleet vehicles, or has damage falling below the “total loss” threshold, which can vary by state.
Clean-title wrecks, especially those with clear history reports, are popular at auctions because buyers can repair the vehicles and then resell them to unsuspecting consumers.
4 ways to protect yourself
If Carfax isn’t 100 percent reliable, how can you protect yourself when buying a used car?
We suggest the following:
1. Check multiple services. Carfax isn’t the only game in town. Go ahead and use their report but double-check the findings with other reports that may get data from different sources. Could it cost you a little money? Sure, but it beats dropping $15,000 on an unsafe vehicle.
Here are a couple of other sites that provide vehicle reports and vehicle identification number, or VIN, checks.
2. Get it inspected. Multiple VIN checks may improve your chances of catching a vehicle problem, but, again, they’re no guarantee. Have a trusted mechanic test-drive and check a used vehicle before purchase to rule out any obvious problems.
3. Get it in writing. Before you fork over any money, ask the seller to provide a written statement outlining the vehicle’s condition at the time of sale. Some states — North Carolina, for example — require sellers to disclose damage in writing. If a seller balks at the request, it could be because he has reason to believe there could be something wrong with the vehicle. While you’re at it, ask for the manufacturer’s repair history if available.
4. Don’t forget about buyback options. Finally, if you do end up with a dud, don’t forget to see if you’re eligible for a refund from one of the VIN check services. Both Carfax and AutoCheck have buyback guarantees if you later discover the vehicle actually has a branded title rather than a clean title. Branded titles include those issued for salvage vehicles, flood damage or inaccurate odometer readings.
These buyback programs can be rather limited, and they won’t give you any cash if you later discover the car had been in an accident or had extensive repairs that didn’t require a branded title. However, they are perks that shouldn’t be overlooked. After you buy a vehicle, be sure to register it with Carfax and/or AutoCheck immediately to be sure you’ll be eligible to make a claim if needed.
For further reading on the subject, head over to our article on the six things you should check before buying a used car and 10 tips to buy your next car for less.