Car Salesman Confidential: How To Use Carfax, Part 1

Everyone knows about Carfax, right? And everyone knows how to read one. Right?

Well . . . no. A few months ago a couple came in wanting to trade their 2002 Ford Escort. They still owed money on it and were concerned they might be “upside down,” or owing more for the vehicle than it was worth. Their instincts proved correct. One of the first things any car dealership does when appraising a trade is to run a Carfax on it.

When the Carfax on this particular vehicle came back, we learned that it had a salvage title. Whenever a vehicle has a salvage title — meaning it was deemed a total loss at some point in its history — it loses a tremendous amount of value. The wholesale value of a typical Escort like theirs was around $3,000, in good condition. With a salvage title, it was worth about half that, or $1,500. And they still owed $5,000. Ouch.

When I showed the young couple the Carfax they were stunned. It came as a total surprise to them that their car had been wrecked. They had bought it from an individual and hadn’t known the vehicle’s history. The seller told them he was in a hurry to sell it because his visa was expiring and he “needed to get out of the country soon.” (You can’t make this stuff up, folks!) His asking price was so low that the couple jumped at it. “We never even thought to ask for a Carfax,” the man explained. “We thought Carfax was something only dealerships offered.”

While this lack of knowledge may surprise Motor Trend readers , it’s not that uncommon. For the record, anyone can get a Carfax for any vehicle they’re thinking of buying, whether it comes from a dealer or you saw it parked down the street in front of Nick’s Soap ‘n Suds with a sign in the window. All you need is the VIN, or 17 digit Vehicle Identification Number, and a few bucks. I highly recommend running a Carfax on any vehicle you’re considering. Branded or salvage titles, number of owners, oil changes, open recalls and mileage readings — these are just a few of the details you’ll find in a Carfax report.

Just how accurate is the information that Carfax provides, you ask? Well, nothing is perfect, and occasionally a Vehicle History Report will contain a mistake or two — usually the result of a typo at the local level. But, according to Carfax, only one out of every 10,000 records they load into their database ever needs to be corrected. And that’s quite a big database. Carfax has records that include virtually every vehicle manufactured in the United States since 1981 — or about 255 million vehicles still on the road and not in the crusher. They have more than 92,000 sources for their data, and load an average of 4.5 million new records every day. And Carfax is finding new sources all the time. Most car dealerships won’t charge for a Carfax. If you download one off their website, www.carfax.com, you’ll have to pay for it. But the $39.99 you’ll spend is well worth it if it saves you from making a $20,000 mistake.

Once you get a Carfax, how do you read it? Most of the information on a Carfax is pretty straightforward. But there are two areas where knowing how to interpret what you read is vital, and those two areas are Accidents and Service History. This week, I’ll talk about Accidents, and in a future column I’ll delve into Service History.

So, let’s suppose you’re in the market for a good used car. You’ve test driven a four year old Zorch Torpedo and you’re ready to buy. You ask the salesman for a Carfax, which he gladly provides. But when you get it in your hands, right there at the top of the page it says “Accident Reported.” What do you do? Do you turn and run away, even though you love the car and it drove just fine?

It all depends. First of all, what exactly is an accident? For many people, the word “accident” is synonymous with “wreck.” When they see that word on a Carfax they envision a smoldering hulk of twisted metal lying in the street, flames licking at the gas tank, an ambulance carrying off survivors, etc., etc.. But the truth is, an accident is anything that is reported to Carfax as an accident. Which could be just about anything. For example, let’s say you’re racing to get home, you see the warning lights at the railroad crossing up ahead and step on the gas, trying to get across before the train gets there. Only you’re a tad too slow. The 3:13 out of Baltimore cuts your car in half and, after the funeral services, your brother the amateur mechanic puts your car back together using J.B. Weld and a generous amount of duct tape, and slaps it on Craigslist. Needless to say, that kind of accident will show up on the Carfax.

But not all accidents are so dramatic. Suppose you’re driving home in rush hour traffic, going 3-5 miles per hour, and you get a little too close to the car in front of you and tap its bumper. That is also considered an accident, even though there was no, or very little, damage to either vehicle. If you or the other driver report this little fender bender to the Police or an insurance company, it will show up on the Carfax as an accident. As consumers, how do we tell the difference?

The answer is, it’s all in the details. Many times, Carfax is able to provide you with a link to the actual accident report in the body of the Carfax. Of course, you’ll have to pay extra for that. But sometimes the accident report isn’t available. What then? Here are the telltale phrases to look for: <li>Vehicle immobilized <li>Vehicle unable to move under its own power <li>Vehicle towed from scene <li>Airbags deployed <li>Injuries reported

If you see any of these phrases on a Carfax, beware. The car was involved in a serious accident and probably suffered major damage. If none of these phrases appear the vehicle probably wasn’t damaged too badly. In fact, Carfax even uses the phrases “Minor Damage Reported” or “Vehicle Not Damaged” in cases like these. However, keep in mind that even a relatively minor accident can lead to unforeseen problems down the road.

Here are the key things to remember. An accident on the Carfax shouldn’t be dealbreaker. A lot of cars and trucks have been involved in some kind of accident. In fact, Carfax says that about one out of every five vehicles on the road today have had an accident or some kind of “damage event” in its past. So seeing the words “Accident Reported” should not be an automatic disqualifier.

Second, even if a vehicle has been in a serious accident, that shouldn’t be a reason to avoid it . . . if the vehicle has been repaired properly. How do you know if a vehicle has been repaired properly? One way is a thorough test drive. Another way is to buy a car that has been Certified by a major manufacturer, such as Honda or Mercedes, or by a reputable used car Certification program like Motor Trend Certified, powered by EasyCare. If the car you’re considering is certified by one of these, it has to meet certain safety standards or it cannot be sold. Third, ask to take the vehicle to a mechanic or repair shop you trust and let them look it over. No reasonable dealership should object to this– especially if there’s an accident reported on the Carfax.

Carfax is one of the best tools available to today’s consumers. If you don’t look at one before you buy, you’ll have no one to blame but yourself if your next car turns out to be a lemon.

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