Can You Trust Carfax? 4 Ways to Avoid Buying a Clunker

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“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?

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 last word. It can be a useful tool, but it has limitations.

Carfax reports glean data from a number of sources. Among others, these include:

  • 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.

The data are then compiled into reports that disclose title transfers, odometer readings, manufacturer recalls and whether the vehicle has been reported stolen. In theory, it also should 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 fixes.

We will let Consumer Reports explain some of the limitations of car history reports:

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 its 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 few other sites that provide vehicle reports and vehicle identification number, or VIN, checks.

  • AutoCheck
  • VinAudit
  • VINCheck

2. Get it inspected. 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 forking 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 many types of damage in writing. Sellers who balk at such requests may have reason to believe there is something wrong with the vehicle. Also ask for the manufacturer’s repair history if it’s available.

4. Don’t forget about buyback options. Finally, if you end up with a dud, see if you are 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, register it with Carfax and/or AutoCheck immediately so you will be eligible to make a claim if needed.

For further reading on the subject, head over to our articles on the “6 Things You Should Check Before Buying a Used Car, but Don’t” and “8 Tips for Buying Your Next Car for Less.”

Have you had a bad experience buying a used vehicle? Share your thoughts in our Forums. It’s a place where you can swap questions and answers on money-related matters, life hacks and ingenious ways to save.

This article was originally published on MoneyTalksNews.com as 'Can You Trust Carfax? 4 Ways to Avoid Buying a Clunker'.

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