Why Are Carfax Reports Important?

Posted Tuesday, Feb 21, 2023

Buying a vehicle is a complex and time-consuming process. From choosing the vehicle to acquiring financing, there is a lot on a buyer’s mind. If you are a potential buyer, there’s one thing you should never skip - the Carfax report. Carfax reports offer valuable information about a car’s history, deeply impacting on your buying decision.

What Is a Carfax Report?

Carfax conducts business in the US, Canada, and Europe and is a market leader in providing web-based reports on a car’s history.

Carfax has been around since 1984, and it is home to the most comprehensive database, giving buyers an insight into the most crucial aspects of a used vehicle.

As a result, some famous dealers and individual sellers offer Carfax reports to their customers, helping them make well-informed buying decisions.

The Top Things to Look for on a Carfax Report Before You Buy a Used Car

1.   Number of Owners

When possible, always purchase a used car with the fewest previous owners. It helps you ask the right questions about accidents and the issues the car has had in the past.

Moreover, a limited number of owners helps you understand the service history better. It also tells you if previous owners properly maintained the car.

The owner section on the Carfax report is comprehensive and tells you everything you need to know about past owners. Here are the points you should look for:

  • Year of purchase
  • Owner type (fleet, personal, etc.
  • Length of ownership
  • Average annual mileage
  • Odometer reading

Whether to buy a fleet vehicle or a personal vehicle is also a crucial aspect of buying a car. Companies use fleet vehicles for commercial reasons.

Sometimes, a fleet vehicle has some life left, but that is a rarity. Most companies drive fleet cars to the peak of their potential until they are no longer eligible for tax breaks for depreciation.

Also, tread lightly on a fleet vehicle, as you might end up with expensive repair work.

2.   Accident History

A previous accident isn’t always a deal breaker when it comes to buying used cars. Sometimes, an accident only leaves superficial damage and doesn’t impact the crucial components of the vehicle.

Some acceptable examples are as follows.

  • Windshield repair from a crack, a chip, or a one-time anomaly. A replaced windshield is perfectly acceptable if it doesn’t affect the car’s drivability.
  • Other acceptable claims include ones that are under $3000. Such claims mostly include repair work to the body. Repairing a door or a bumper cost $1500 to $2000. Like a shattered windshield, these repairs don’t affect the car’s drivability.

However, claims beyond the $3000 mark are problematic, as they involve damage to important components and the car’s structural integrity. These repairs are incredibly expensive and can cause problems down the line.

Damage to the engine, gearbox, suspension, and airbag will lead to costly repairs and maintenance as you drive the car. In such situations, the better option is to go for an expensive vehicle with less damage.

3.   Odometer Reading

To avoid rollback fraud, you must check the odometer reading on the Carfax report. Some fraudulent sellers roll back the odometer to fetch a higher price.

Using its sources, the Carfax report carries the last odometer rating, thus minimizing the possibility of fraud. Your job as a buyer is to compare the odometer reading and the miles mentioned on the Carfax report.

4.   Where the Vehicle Was Registered

If the car has been registered in different places, it is a red flag. Some dishonest sellers purchase flood-damaged cars that aren’t registered with Carfax. They register them as far as possible to avoid any suspicion.

Car thieves use the same technique to skirt the authorities and sell these cars to naive buyers. If you come across a car registered multiple times, walk away.

5.   Service History

A neglected car that runs perfectly is no different than a ticking time bomb. There are a few things you can do to determine whether a car has been adequately serviced.

  • Subtract the car's model year from the current year and multiply the difference by two. If the service history number is less than the product, you should ask why the car hasn’t been serviced according to the manufacturer’s instructions.
  • Divide the odometer reading by 3000 because 3000 miles is the standard interval between instances of servicing your vehicle. If the numbers aren’t far apart, you’re good, but it is better to ask why.
  • You must demand a comprehensive service history to determine if the previous owner took proper care of the car. The higher the diligence in record keeping, the higher your likelihood of buying a well-maintained vehicle.

6.   Lien Check

Sometimes, the previous owners still owe money on the car. The Carfax report will show if the car has a lien against it.

In such cases, you might have difficulty with the registration process. Make sure the seller provides you with a lien release.

The name on this lien release should be the name mentioned in the title and in the payoff or financing information.

Final Word

Buying a damaged used vehicle is a waste of your time and money. This is where a Carfax report can be a game-changer.

Carfax reports provide you with the complete timeline of the vehicle - ever since it left the dealership. It gives you an overview of things that you need to check before buying the vehicle, like the odometer readings and servicing history.

Apart from reading the Carfax report, make sure to ask the right questions, like the ones mentioned above, and you won’t end up with a lemon.