The facts about CARFAX: gimmick or good idea?

You typically hear a lot about CARFAX when you’re shopping for a used car. It might sound like one of those unnecessary add-ons, but it actually has a lot of useful information—and exactly the things you need to know about a car you’re considering buying.

The most obvious things to look for on a CARFAX vehicle history report are accidents—or records of any major repair work on the car—but there are a lot of other really important aspects of a car’s history to check for, as well.

Ownership history

It’s always important to know the ownership history of a car; if it’s had a high number of owners in a short amount of time, that’s something to look into. It could be nothing, or it could mean there’s something wrong with the car—maybe there’s a reason no one wanted to hang on to it for long. It’s also worth considering that more people driving a car means there have been more driving styles, and more potential variations in how the car was cared for. These can all have an impact on the longevity of the car and its components.

Location history

A CARFAX report tells you everywhere a car has been serviced, or registered. It’s useful to know which states the car has been in—for example, if it was registered in Minnesota, you know that it’s probably been exposed to a significant amount of snow and road salt, which can lead to rust.

Likewise, if it was registered in an area that had significant flooding while it was there, you may want to look extra-closely for signs of flood damage. This is becoming a really important point, as many cars have been flood-damaged in severe storms over the past couple of years.

If a car’s been registered in a snowy area, you’ll want to check carefully for rust.

Odometer history

Another useful thing a CARFAX check will tell you is the car’s mileage history—it will show you what the mileage was at various points (usually every inspection, service, or registration renewal). This is good to see, so you can make sure it all makes sense, and that there hasn’t been any odometer tampering. (They’re not as common as they were with older cars, but odometer shenanigans can still be a thing!)

Accident and repair history

One of the most important things to know when you’re buying a used car is whether it’s been in an accident. A seller might not tell you this, or (if they’re not the original owner) might not know. Likewise, it’s good to know if the car you’re considering has had a high number of significant repairs; if it seems extreme, it might be a money pit that you should avoid.

Any record of accident damage/repair is likely to diminish resale value, often significantly

As for accidents, they may be minor or major, and in many cases the car can be repaired to look and perform as good as before the damage. But, the value will take a hit. A car that’s been in an accident will always sell for less than one that hasn’t. Often several thousand less, depending on the overall value of the car. Many buyers won’t even consider a car that’s been wrecked. So that’s an important consideration, and unless you get an extremely good deal—one that you’re comfortable will offset potential losses when you go to sell it—then move along to a car that hasn’t been in an accident.

What sorts of things might not show up?

CARFAX gets data on cars via VIN number from a broad range of sources that cover various types of information. Those sources include state DMVs, body shops, insurance companies, service and maintenance centers, state inspections centers, dealerships, law enforcement and fire agencies, and rental car companies, as well as a few others. Its network is very effective, and rarely misses anything significant.

There are times, however, when things don’t show up on a CARFAX report. In many states, body shops are not supposed to do significant repair work (commonly that’s anything in excess of $1,000) on a car unless they see proof that it’s been reported to the police.

Likewise, in most states drivers are required to report accidents to the police. But sometimes driver’s don’t report accidents, and they pay repair costs out of pocket instead of filing a claim with their insurance company. In those cases, an accident might not make it into a CARFAX report. That’s why it’s important to have a third party inspection of a car before you buy it, or do a very careful one yourself, if you know what to look for.

A CARFAX report can be a helpful way to see if a car’s had regular service.

Repairs and scheduled maintenance also might not show up on a CARFAX, depending on the repair facility and their reporting systems. This is why it’s helpful to try to get service records from the seller. Even better, see if you can get them from the dealer or shop where the car has been serviced.

In short, the CARFAX report cost ($39.99) is a small price to pay to minimize your risk of expensive surprises later on. But in many cases, a seller may preemptively offer a CARFAX report. And some marketplaces, like TRED, offer buyers a free CARFAX report on any car they’re interested in.

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