One of the easiest ways to purchase a new or used car is through an online car loan application
. But as easy as this is, there are a number of things consumers should look out for, especially when looking at used cars. One of the biggest of these is the Carfax report.
On the front of a Carfax brochure is the picture of a happy customer holding the keys to a new car. At the very bottom is the statement: "The Truth About Used Cars", while on the inside, the top of the first page states: "Buy With Confidence". But how much of this is true and how much is pure hype?
The inside first page of the brochure states that "CARFAX® Vehicle History Reports™ uncover the truth about used cars, providing information on: major accidents, mileage accuracy, number of owners, lemon/manufacturer buybacks, recalls/major repairs, safety & reliability".
The brochure goes on to state that it is "information that you can trust" and that Carfax "maintains the nation's largest, most comprehensive vehicle history database". In addition, the information is compiled from "thousands of reliable sources". These sources include various state motor vehicle agencies, police accident reports, car auctions, service contract companies, safety organizations, rental car companies and reports from various emissions inspection stations. But as a consumer, you need to know that there are a number of sources that are not among the "thousands" that don't report to Carfax.
This is the first issue: Nowhere in the brochure does Carfax mention accident reports originating from insurance companies. After all, if a tree falls on a car, the owner isn't going to report it to the police, but they are going to report it to their insurance company. Certainly, a Maple tree falling on a vehicle could be considered a "major" accident. The problem is that insurance companies don't report their information to Carfax. Without this information, the Carfax report remains clear - even if a tree fell on the car that you're thinking about for a car loans online.
Well then, what about the repair shop you take it to? Unfortunately, not all repair shops report to Carfax, either. So, you could have a scenario in which a vehicle has been heavily damaged and extensively repaired. What about the "huge" database at Carfax? There is no evidence that any of this has transpired. You, my friend, are looking at a car that, according to Carfax, has a "clean" vehicle history report - but not something you'd want to buy with car loans online.
Just as the name "Carfax" has become synonymous with the term vehicle history report (also a trademark of Carfax), their buyback guarantee has become legend in the automobile business. After all, if they make a mistake, they'll buy your car from you, right?
Here is a second issue: Their simple claim of "We miss it … We buy it!" has more than a few caveats. Even in the brochure, the guarantee states "you're protected from buying a vehicle that a DMV has reported as having severe damage, mileage fraud or lemon history". In other words, the guarantee only covers "branded" titles and titles with mileage that is notated as "not actual". In case you're wondering, a branded title is a title that is issued to a vehicle that is declared a total loss (such as a salvage title or scrap title), has been damaged by water (a flood title), or used for purposes other than a private vehicle (taxi, police).
Since this status has to be reported by a DMV that reports to Carfax, the only thing the guarantee covers is a mistake by Carfax in reading the DMV report. In fact, if you go to the Carfax web site and navigate to the legal disclaimer section, you can read the following information:
"YOU EXPRESSLY AGREE THAT USE OF THE SITE IS AT YOUR SOLE RISK. NEITHER CARFAX, ITS AFFILIATES, NOR ANY OF THEIR RESPECTIVE EMPLOYEES, AGENTS, THIRD PARTY CONTENT PROVIDERS, OR LICENSORS WARRANT THAT THE SITE WILL BE UNINTERRUPTED OR ERROR FREE; NOR DO THEY MAKE ANY WARRANTY AS TO THE RESULTS THAT MAY BE OBTAINED FROM USE OF THE SITE, OR AS TO THE ACCURACY OR RELIABILITY OF ANY INFORMATION, SERVICE, OR MATERIALS PROVIDED THROUGH THE SITE."
Doesn't exactly make you feel all warm and fuzzy, does it?
Here's what you should do: If you are buying from a dealer and the dealer offers you a free Carfax report, by all means don't turn it down. Although the information contained in the report may be incomplete, it may be helpful in forming a basis for your buying decision. But there are other things that you can do to finish filling in the rest of the car history puzzle.
The next thing you should do is to take the car to a certified mechanic - preferably one who is an ASE certified master mechanic. This service normally runs between $100 and $200, but consider that money well spent, as a car with hidden damage could cost you thousands of dollars in repair bills and lower resale value.
Finally, remember this: While a Carfax report can certainly be used as a tool in making a buying decision for a car loans online, it's only the first step in finding out if that used car you thinking of buying is really a cherry or just a lemon.