Buying a Used Car Tips
Vehicle History Report
Your Key to a Good Used Car
By Philip Reed
Date Posted 05-13-2003
You're shopping for a used car when you think you've hit pay
dirt. It's a '95 import with low miles. It drives great, and
the price is right. When you question the owner about the car's
history, he says he bought it from a used car lot only two years
You're about to write a check when you
have a troubling thought: This deal seems too good to be true.
Maybe something's wrong with the car that they are keeping hidden.
Who owned the car before? Is there any damage or problems you
should know about?
At one time there was no way to check
a vehicle's history. Buyers could only go on the evidence in
front of them, basing their decision on the mechanical condition
of the car. But computer technology has made it possible to
use the Vehicle Identification Number (VIN) to reveal a car's
possibly checkered past.
Vehicle history reports can be ordered
from a number of Internet companies. The first company to offer
this service is Carfax, which, as the name suggests, began faxing
used car reports as early as 1986. Now, the Fairfax, Virginia-based
company accesses 4,400 different information sources and a database
of more than 2 billion records to compile reports that are e-mailed
almost instantaneously to customers. Users can also get a free
Carfax Safety & Reliability Report that includes key make
and model level information when ordering the unlimited Carfax
"We literally have every car on
the road in our database back to 1981," said Carfax Vice
President of Marketing Scott Fredericks. He notes that 1981
was when the U.S. government accepted the VIN as a standard
tracking code for a vehicle's history. "Think of the Carfax
as the DNA of the car — the Carfax report never forgets."
Vehicle History Reports — A Growing
While Carfax seems to be the leader
in this new field, there are many other companies vying for
the consumer's business. Many of these companies draw on similar
sources for their information and present the data in a compiled
report at competitive prices. Carfax charges $19.99 for a single
report and $24.99 for an unlimited number of reports for one
Consumer Guide has taken the process
one step further. Vehicle history information is drawn from
the monster database of Experian (with 1.7 billion records)
and coupled with Consumer Guide's repair information.
"What we do that is unique is marry
the Consumer Guide data to [vehicle history reports] on the
fly," said Grant Whitmore, general manager. "We also
track trouble spots for year, make and model for that vehicle."
While the information doesn't pertain to that specific vehicle,
it gives a buyer a general picture of the car's reliability
and the replacement cost of parts, should something go wrong.
"If you are selling your car, you
can buy the report and show it to the potential buyer,"
suggested Consumer Guide Product Manager Robin Kowalski. "This
will show [consumers] there isn't some sort of wreck that they
weren't aware of."
Consumer Guide launched its Vehicle
History Reports February 22, 2001. Whitmore declined to give
specifics about the number of reports that have been ordered
but said, "It's been extremely popular."
If you order a report from Carfax, your
report is broken into nine categories: report summary, vehicle
specifications, accident check, mileage accuracy check, lemon
check, ownership check, recall check, warranty check and vehicle
history details. The different pieces of the report are summarized
in a table that may flag problems. Details are listed later
in the report.
Most importantly, Carfax provides an
independent check of a vehicle's history. While the odometer
of a used car might show that it has only 55,000 miles, the
Carfax might indicate that the odometer readings at key events
in the car's history — emissions tests or title changes
— don't match up.
For example, the report might show that
a certain vehicle was smog-checked in December 1999 at 55,000
miles. But then, when a change of title was issued two months
later, the odometer reading was recorded as being 45,000 miles.
Obviously, there was some kind of foul play here.
The number of miles a car is driven
directly affects the price of the car. Therefore, a seller has
a strong incentive to rollback the odometer. Each excess mile
a car is driven — over the expected yearly average of
from 12,000 to 15,000 — reduces its value. Therefore,
turning back an odometer 10,000 miles can increase the sale
price of the car by $600.
In another situation, a person might
be ready to return a lease car and be faced with paying $2,000
in mileage penalties to the dealer. A quick trip to a "spinner"
— someone who turns back odometers — will save them
a lot of money. In this way, dealers are defrauded, and so is
the next person who buys the car.
"Folks think because [the odometer]
is digital, it is harder to rollback," Fredericks said.
"But it's not. Anyone with a laptop [and the right software]
can plug into the car's computer under the hood and do it."
He added that some estimates have shown that 40 percent of lease
cars have been involved in some type of scam.
Title Washing & Curb Stoning
Another scam detected by Carfax is called
title washing. This occurs when "state X might not recognize
titles from state Y," Fredericks said. "People who
are unscrupulous will take bad cars and move them into that
state. This happens every day."
But a Carfax report tracks the car as
it crosses state lines. If a car has been "branded"
in another state — with a salvage title, for example —
this will be revealed on the report. Salvage titles are assigned
to cars that have been considered a total loss by insurance
companies. However, the car might still run and be drivable.
Still, having a salvage title significantly reduces the car's
Curb stoning occurs when a dealer has
an inferior or damaged car he can't sell on his lot. He gives
the car to a salesperson to sell through the classifieds, as
if it were a private party sale. However, a Carfax report will
show that the title recently changed hands and may reveal that
it is a lemon or an otherwise branded car. Fredericks recommends
being suspicious if the seller's name is different from the
name on the title.
Edmunds Test-Drives Carfax
While we were writing this article,
Carfax gave us an account to run a number of vehicle history
reports. In many cases, reports were run on cars that were known
to have salvage or lemon titles. Carfax reports caught those
problems and flagged the pertinent information.
As a test case, we entered a VIN number
for a '98 Corvette we knew had been branded as a lemon. Sure
enough, the Carfax report clearly flagged the problem by stating:
"LEMON LAW VEHICLE Repurchased by manufacturer."
In other cases, we ran reports on cars
we knew little about. In one instance, the report noted a "potential
odometer rollback." Looking closely at the vehicle's file,
however, it appeared the source of the rollback alert was probably
a clerical error at a smog inspection station. Everything else
about the car's history lined up.
"One of our fundamental tenets
is 'Data authenticates data,'" Fredericks said. "This
means that the more data sources we collect, the more verification
we receive about the vehicle's history — including odometer
In another case, an Edmunds employee's
husband was considering buying a '95 Acura. He test-drove the
car and felt it was in good mechanical condition. However, after
running a Carfax report, it was discovered that the car was
given a salvage title in 1996 and, several years later, a junk
title (a junk vehicle is one that was reported to the DMV by
an individual or a dismantler as having been dismantled). When
the seller was confronted with this information, they said,
"Oh yeah, I thought I told you about that."
In yet another case, an Edmunds editor
ran the VIN number of a car she had owned several years ago.
It was the only report that was returned listing an accident.
It read, "Accident reported involving left side impact
with another motor vehicle." Fredericks explained that
Carfax receives information from law enforcement sources reporting
accidents. If a car is totaled in an accident, a salvage title
is assigned. But prospective buyers will still want to know
about minor accidents. In this way, they can find out if the
damage was properly repaired.
Consumer Guide's Whitmore said their
reports also list accident reports, usually if they were serious
enough to cause damage to the car's frame.
The Dealer's Angle
Car dealers have also found the Carfax
reports valuable. In many cases, a dealership will run a report
on a car that a customer brings in as a trade-in. The Carfax
report allows them to protect themselves from accepting a branded
car, one that would be difficult to resell. Additionally, dealers
can generate Carfax reports on the vehicles they are trying
to sell. In this way, shoppers don't have to take their word
for the vehicle's history — the information is being provided
by an independent source.
What Does the Future Hold?
With the increased speed of data communications,
the amount of information about vehicles will increase in the
coming years. Both Carfax and Consumer Guide hope to tap into
service and repair records in the near future. Then a consumer
can see if a car was maintained according to the manufacturer's
requirements before purchasing it.
"We are working on [getting service
records] now," Fredericks said. "That's our next big