Autohitch has spent some time in other articles discussing the Carfax Buyback Guarantee and How To Get a Free Carfax, but in this post, I wanted to address the basics of Reading a Carfax Report because when you pull one-
There are sections that are bright, shiny, and colorful that sellers want you to see, and there are others that do not stick out:
But those areas are just as important!
- What A Carfax Will Show You
- Red Flags On A Carfax Report
- Listed As A Manufacturer Vehicle
- Sample Carfax Report Walkthrough
- 4. Number Of Owners
- 5. Service History And Service Records
- 6. Type Of Ownership
- 7. Location Of Last Registration
- 8. Last Reported Odometer Reading
- Reading A Carfax Report- Conclusion
- Reading A Carfax Report (FAQ)
What A Carfax Will Show You
A Carfax is designed to show you everything in the history of the vehicle,
(That was reported).
I highlighted “That was reported” because a Carfax doesn’t know if someone damaged a car and fixed it; they only know if someone damaged a car and reported it.
That’s why any honest person will always tell you that a Carfax or an Autocheck report is only a guide and a starting point, not a deciding factor.
See Also: Autocheck Vs. Carfax.
Red Flags On A Carfax Report
For the reader in a hurry, let’s skip by what you may consider “Obvious” Red Flags on a Carfax and get to a couple you may not have considered yet:
Listed As A Manufacturer Vehicle
The most unknown item to look for on a Carfax, but no less important, is a notation that a vehicle was, “Listed as a manufacturer vehicle, sold at auction”. For a more in depth look into exactly what that is, read the article attached to the link. But, essentially, these vehicles are usually cars that had such serious defects that the manufacturer had to buy them back from an owner. They are not always defected cars! They could also simply be a car that was used in displays at auto shows or large sponsored events. So, if you see this on your vehicle’s history, make it a point to ask the dealer why the manufacturer sold the car at a dealers auction.
Vehicle Sold At Auction (#9)
As Carfax will mention in their reports- “Millions of used vehicles are bought and sold at auction every year”, a seemingly obvious attempt to downplay dealer auctions as no different than any other vehicle purchase/sale, but that just simply isn’t the truth. A car sold at the dealer auction is:
A car that another dealer couldn’t sell.
In fairness, that could be for a few reasons that are not “Negative”, such as:
- Maybe the dealership is clearing out room on the lot
- Maybe the dealership is franchised and has liability concerns limiting the sale of certain used cars
- Maybe there was a bank repossession and it’s the bank selling the car
On The Other Hand:
- Maybe the franchise dealership couldn’t sell the car because it had too many flaws/recalls/defects
- Maybe the dealership had the car sitting on their lot too long (Wouldn’t sell)
- Maybe the car is simply undesirable (Accidents, Damage, ETC)
The Bottom Line:
The car is at the auction because the current owner can’t/won’t sell it. If they could, and make a good profit, they likely wouldn’t be there (They are Dealers, Right?). That being said- That isn’t ever going to be enough for me to recommend that you don’t buy one of these vehicles (Far from it). But a vehicle sold at a dealer auction IS at the least a Yellow Flag to trigger an independent vehicle inspection.
Red Flag #2
Carfax Was Pulled Weeks Before!
Check Your Report Date
Always be sure to check the date of any Carfax you are presented and request a new one if you receive one that is several weeks old! (Dates can be found under the main score card and inside of the “Buyback Guarantee” tab.
Dealers know that consumers are weary of vehicles purchased at dealer auctions and that you would much rather buy a used car that they obtained directly from its original owner. So, some dealers decide to pull the carfax reports of vehicles BEFORE they are sold at auction. This provides them with a vehicle history report that looks as if the previous owner must have just sold or traded in the car.
Sample Carfax Report Walkthrough
1. Carfax Accident Report
2. Carfax Damage Report
The first, and undoubtedly most important section of the Carfax Report is the Carfax Accident and Damage Report. Here you are going to see either that big green check mark or a yellow/red warning sign. The Yellow Warning Sign (Pictured Above) will indicate an accident or damage that was reported, and it is important to note that the two can be and are often different.
- Accident Reported– An incident that typically will involve another vehicle and a police report.
- Damage Reported– This will be from any damage to the vehicle, be it a two-car or a single-car accident, and even door dings and scratches. Yes, I have heard of small dents being reported.
3. Carfax Branded & Salvage Title (Title Status)
A Red warning sign inside the top box of your report will refer to a vehicle that has a Branded Title. From there you will also get a breakdown of a few factors that could include:
- Not Actual Mileage
What is important to pay attention to in this section is if you only see the designation of “Salvage”, or if “Rebuilt” is also included. The difference between a Rebuilt and Salvage title is going to be the difference in whether you buy a car that is street legal or not, so yes:
It’s Very Important!
If you would like more information (In detail) on the difference between a Branded, Salvage, and Rebuilt title vehicle, please head over to our post, “Salvage And Rebuilt Title Cars | Buyer Beware or Great Deal?”
4. Number Of Owners
Too Many Owners “Is” A Negative
The next section of a Carfax Report that you should pay attention to is the number of owners. To make this simple: If you have a car that’s three years old, you should have no more than one owner. If you have a car that’s ten years old, a good number would be three owners.
These estimates should only be used as guidelines and should never substitute for common sense. If you are buying a car that’s three years old with two owners because the first owner gave back a car to the dealership the same week they bought it, that’s not going to be considered a negative. You also have Lease Swaps that are becoming more and more popular, which can create more owners than we are typically accustomed to seeing.
5. Service History And Service Records
This section of the Carfax Report probably grinds my gears the most- Service History Records. Let’s clear the air about this part of the report:
Lack Of Service Records Is Not A Negative Factor When Buying A Used Car
The very nature of Vehicle History reports makes their value vulnerable to a lack of reporting, and there are simply too many mechanics and service departments that do not report vehicle services for you to self-determine that a car without a service history means the car wasn’t cared for. I myself change my own oil, which actually allows me to use higher quality materials because that way they become more affordable.
Doesn’t That Make My Car Better?
It should, but sadly because this is not going to be on my Carfax Report, your typical used car buyer (You, for example) might actually get a bad feeling about my car, possibly concluding that I never changed my oil.
6. Type Of Ownership
How A Used Car Was Driven Matters
I would venture to say that the section of the Carfax which identifies the type of ownership a car was registered under is the most skimmed over on the report, and like any section, it shouldn’t be, because it’s there for a reason.
To understand why the type of ownership matters, let’s look at an example: We don’t like cars with multiple owners because that’s more drivers, and that usually means the chance for a vehicle to be driven harder goes up. Now apply that line of thinking to buying a rental car…
The types of ownership on a Carfax
- Govt or Municipal
Before you assume that I am going to tell you anything outside of personal ownership is bad, let me stop you! I actually really like Government or Municipal Vehicles and “Some” commercial vehicles.
Cars used by government agencies tend to be (At the least) very well maintained and (In certain instances) have very low miles. Because of this, don’t overlook a vehicle just because a government agency used it.
Commercial Vehicles are classified as simply vehicles that were registered to a business. This means they could be used heavily for travel or deliveries, or they simply could have been a car the owner decided to put under their business’s name rather than their own. For this reason, if if you see a vehicle marked as Commercial, look a bit deeper and see if it might have been a car that was used more like a personal car (12k miles a year, clean, maintained)
7. Location Of Last Registration
Avoid Rust Cars?
This section of the Carfax Report is going to tell you the last state the vehicle was registered in. The idea behind this information is that if you see a car from a northern state, or a state that is known for a lot of snow and salty roads, you can try to avoid that vehicle or at least be alerted to the fact that it may have potential rust problems.
The simple answer is yes. The more complex answer is “Supposedly not as fast”. It’s said that newer cars are built to withstand the salt of northern roads better, but from everything I have seen and heard it’s not so much of a preventive defense as it is something that delays the inevitable.
Continue to be weary of cars from up north more so than cars from the south (Florida, Texas, etc) because of potential rust issues. If you are able to get a vehicle inspection and find no rust, then the cars are comparable.
8. Last Reported Odometer Reading
Has The Odometer Been Tampered With Or Rolled Back?
The bottom section in the Carfax Report Card is going to address the odometer and show you the “Last Reported Odometer Reading”. This particular section of the report is designed to protect used car buyers against anyone who may have rolled back a vehicles odometer so that they could sell a car for more money (Showing low miles).
Can An Odometer Be Rolled Back? (2019)
The answer is that in 2023 an odometer can still be rolled back. Listen: If you can hack Facebook, then someone can figure out how to rollback a car’s mileage! That being said, it is less of a problem than it used to be, but it can and does still happen; however, having the last reported mileage shown on a Carfax makes any attempt very difficult to pull off unless you are only shaving off a few thousand miles, and why would they waste their time doing that?
Reading A Carfax Report- Conclusion
Remember- Carfax reports are not the deciding factor, they are a guide. They can tell you a whole lot if you know what to look for, but they can miss just as much. The fact that you should buy a pre-purchase car inspection isn’t negated by a “Clean Carfax”, and if you are trusting the purchase of any used car to a sheet of paper, in today’s world, you should expect some surprises down the road.
If you have any questions we have not covered here, please feel free to comment them below!
Reading A Carfax Report (FAQ)
Damage Reported Vehicle functional
When you are looking at your Carfax Report and see, “Accident/Damage Reported Vehicle Functional”, this means that the car was indeed involved in an accident, but that it did not need to be towed away. In this instance, the fact that a vehicle could be driven away signifies damage that wasn’t (Very) serious.
What Does Minor Damage Mean On A Carfax Report
Essentially, minor damage shown on a Carfax is typically going to refer to damage that doesn’t result in the vehicle having to be towed. It is somewhat similar in nature to when Carfax lists a car as having functional damage reported; however, minor damage is typically going to be much less significant types of damage such as:
Damage Reported On Carfax But No Accident
It is actually very common to pull a Carfax Vehicle History and see that damage was reported to a car, that at the very same time, was showing a history with no accidents. The perfect example of an event that could cause this would be when you back out of a parking space and hit something other than another car, maybe a tree or a pole.