Buying Tips

Vehicle History Report: Your Key to a Good Used Car

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 ago.

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 report option.

"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 Field

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 $29.99 for a single report, $34.99 for ten reports, and $39.99 for an unlimited number of reports for one month.

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."

Odometer Rollbacks

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 value.

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 rollbacks."

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 frontier."

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