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How Reliable Is Carfax? Can You Trust a Carfax Report?

by | Last updated Apr 20, 2023 | Car Buying, Used Cars

Purchasing a vehicle is no easy task. One way to make the process a bit more confidence inspiring is to get a Carfax on a used vehicle to better understand it’s history. That begs the question though, how reliable is a Carfax report?

Carfax, and their primary competitor, AutoCheck are the industry standard when it comes to vehicle history reports. These companies have built networks of data providers that allow them to compile the most comprehensive history report on any given vehicle.

Although these companies work diligently to capture as much information as possible, they are not able to get their hands on everything. This is where Carfax and AutoCheck can run into issues. Their data feeds aren’t real time, and not every dealer, repair shop, or vehicle owner reports back to them. Worst of all, occasionally people will do nefarious things so that their Carfax report doesn’t show accurate information.

Let’s review how Carfax works and explore what you need to know before you purchase a used car. Without further ado, let’s dive in.

Carfax reliability: only as good as the data they receive

I can assure you that at least once in my 43 year career in the car business I “fat fingered” a key or two when entering information about a car into an online system. Unfortunately this happens more than we’d like to admit, and the end result is that companies like Carfax end up with information from dealers that isn’t always accurate.

The saying “garbage in, garbage out” couldn’t be more true when it comes to Carfax and their business model. Carfax entirely relies on their network of dealers, mechanics, and service centers to provide accurate information about vehicles. Unfortunately, that means relying on human beings that are busy and overworked to get things right 100% of the time.

The Carfax website boasts that they have “112,000 different sources” of data, which is truly incredible, and is what makes them the industry standard for vehicle history reports. As a car buyer, you simply need to be aware that the way Carfax captures data from the 112,000 sources is generally dependent on a human being entering information correctly. If you see a Carfax report where the odometer read 2,500 miles on 10/10/18, and then 5,200 miles on 10/11/18, you can be fairly certain it’s a typo. This doesn’t mean Carfax is bad (not at all), it simply means you should diligently review the data you see on a Carfax report to make sure it is logical and seemingly accurate.

Data is not realtime, there is a delay

One of the biggest frustrations we hear from CarEdge readers is that Carfax reports frequently “miss” recent accidents or other similar activities. This is 100% true, since Carfax is not “real time.”

As you know, Carfax relies on it’s network of thousands of data providers to share information with them. Information about an accident that happened yesterday may not appear on a vehicle’s Carfax until next week. Unfortunately there is latency between when an activity occurs, and when Carfax becomes aware of it.

This is why it is extremely important that you have a pre-purchase inspection completed on any used vehicle you are considering purchasing. The pre-purchase inspection will shed light on any issues the vehicle has that may not have been reported to Carfax yet.

If you’re thinking about buying or selling your car, you might enjoy this article if you haven’t read it already: The Car Buyer’s Glossary of Terms, Lingo, and Jargon

Not everyone reports to Carfax

Although Carfax is the industry standard for vehicle history reports, and they do have an incredible network of participating data providers, you need to understand that not everyone reports everything to Carfax. 

Here’s a great example … Rental car fleets. Rental car companies are generally self-insured, which means that  when a rental car is in an accident the rental car company’s in-house insurance agency handles the claim. This in-house insurance company may not report to Carfax, whereas all of the traditional consumer insurance agencies do. What happens to that VINs Carfax when the repair was never shared with Carfax? Well, nothing, because Carfax isn’t aware of it.

This happens more often than you’d like to think, and it further reinforces the need to get a pre-purchase inspection completed before a purchase. Another common example is when a vehicle is serviced at a small “mom and pop” mechanics shop that is not part of Carfax’s network. You may see a Carfax report that shows no vehicle service records for years, however it is likely that Carfax simply wasn’t collecting data from the auto shop where that owner was taking their vehicle.

Can you trust a Carfax report?

So how reliable is a Carfax report? It’s the best vehicle history report you’ll be able to get your hands on, and in that regard, it’s very important you review it before purchasing a vehicle. Is it the “end all be all” for your purchase? No, that’s where the pre-purchase inspection comes into play again. Should you check other sources for vehicle history information? Absolutely.

One of our favorite tactics to dig up even more information about a vehicle’s history is to call your insurance carrier and give them the VIN of a vehicle you are interested in purchasing. The insurance agency may have access to other information that you do not see on the Carfax or have otherwise been privy to. Give this a shot when you’re researching your next used car purchase.

Buy a Car Online With These Email Templates (Copy & Paste)

by | Last updated Apr 17, 2024 | Car Buying

Buying a car shouldn’t be so damn hard. Since the pandemic, more and more car dealerships have started offering ways for you to buy a car online. That being said, negotiating a fair car deal is (in some ways) easier than ever before.

To buy a car online you need to be prepared to contact multiple car dealers via email. We wrote an entire guide on this process. The purpose of this page is not to talk strategy, but rather to be a repository of email templates you can copy and paste while you buy a car online.

Please comment below if you have an email template request and we’ll add it to this page. Our hope is that you can copy and paste these email templates so that your online car buying experience is easier, less stressful, and potentially even fun (we said potentially).

Email Requesting the Best out the Door Price Quote

Email For When the Dealer Says “The Price is The Price”

Email Asking If a Car Is Still Available

This email should be sent to the sales department as a general inquiry, or to the internet department if a dealership has one. You can typically find the email address for these departments on the dealership’s website.

Email Asking For a Lease Quote

Email To Factory Order a New Car

Email for the General Manager or Dealer Principal

Email Response for When The Dealer Doesn’t Provide the Info You Requested

More Free Car Buying Help

Car buying cheat sheet

Ready to outsmart the dealerships? Download your 100% free car buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!

4 First Time Car Buyer Tips

by | Last updated Apr 25, 2023 | Car Buying

The internet is full of guides and blog posts titled “first time car buyer tips.” A quick google search yields thousands of articles with “pro tips” for how a first time car shopper should approach the car buying process. Sadly, many of those articles are full of fluff and BS.

For many, buying a car is either the largest, or second largest purchase of their life. Regardless of if you’ve bought a dozen cars during your lifetime, or if this is your first time going through the process, it’s very intimidating. That’s why we filmed the video above (just click play to enjoy that version instead of reading), and wrote this guide, to help make sure you get the fundamentals of the car buying process done right and worry free.

We also offer Deal School, our 100% free e-course that will teach you how to go through the entire car buying process (or become a car salesperson, whichever you prefer), so be sure to check that out as well. In this article however, we’re going to focus our attention on 4 first time car buyer tips that you need to know before you go to a dealership.

Without further ado, let’s dive in!

Car buyer tip #1: Know your budget

This assumption may not hold true for everyone that reads this guide, but for 99% of you, it’s likely you are not a cash buyer. If this is your first time purchasing a car, it’s likely you’re going to finance your purchase, which makes sense, how many people have tens of thousands of dollars sitting around to plunk down on a depreciating asset?

It’s important to understand what your budget is for your first car (and for all your future vehicle purchases for that matter), and to factor in all of the costs associated with owning an automobile. For example, you will most certainly encounter salespeople that will ask you, “What’s your monthly payment goal?” And you’ll reply, “$400.”

Read our complete guide on how much to spend on a car: How Much Should I Spend on a Car?

Does that $400 include insurance, gas, maintenance costs, etc? Or are you thinking of that $400 as your budget for only the loan payment each month?

My recommendation is to set a monthly budget goal that is reflective of the total cost of ownership (including insurance, and gas). Factoring maintenance expenses can be difficult because that is entirely dependent on how frequently you drive the car.

{Bonus tip, don’t negotiate on the monthly payment. Instead focus on the OTD price. Link to calculator/blog post.}

Car buyer tip #2: Know your credit score

Did you know that annually you have free access to your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax)? Most people aren’t aware that the federal government provides access to each report (for free) at www.annualcreditreport.com.

Before you buy your first car, be sure to know your credit score. Why? Because car dealers make a lot of money when you don’t! If you’re a first time car buyer, it’s likely you have a “thin file” (not a lot of credit history), and when a dealership runs your credit to get loan options on your behalf, don’t be surprised if they come back with outrageously high interest rates.

However, if you knew your credit score beforehand, you could be proactive and secure outside financing through a local bank or credit union and not be reliant on the high interest rate options the dealer finds for you.

It’s also important to be aware of manufacturer incentives for recent college graduates. A lot of first time car buyers are recent graduates, and car manufacturers create special incentives to appeal to that demographic. Many recent college grad programs include special financing through the manufacturer’s captive lender that allow you access to interest rates you could not have obtained elsewhere.

Familiarize yourself with these programs (and your credit score) before blindly accepting the interest rate the dealer secures on your behalf. This investment of time will certainly save you thousands of dollars over the lifetime of your loan.

Car buyer tip #3: Co-signers can help

If you have no credit history, a co-signer can help you get approved for a loan. If you have bad credit, a co-signer won’t make up for that. In the example we used above, when you have a “thin file,” a co-signer will help secure a loan with a more reasonable interest rate.

A lot of recent college graduate programs require a co-signer.

Co-signers are typically family members, such as parents, grandparents, aunts, or uncles. It’s important to understand that the co-signer is obligated to make the loan payments if you don’t. By co-signing on your loan, their purchasing power is impacted. The co-signed loan shows as an obligation for them on their credit applications in the future.

What does this mean for you? Make sure you make your car payments! The last thing you want to do is negatively impact the credit score of your family members. If they co-sign for you, they’re risking their reputation on your ability to make your payments. Please don’t take that lightly!

Car buyer tip #4: Do your homework

If you’re a recent college graduate, the concept of doing your homework should still be second nature to you. But what do I mean by “do your homework” in this context?

Focus on two things:

  1. Study the reliability, cost of maintenance, and over all five year cost of ownership about each vehicle you’re interested in purchasing. Edmunds has good resources for that: https://www.edmunds.com/tco.html
  2. Get a sense for the expected depreciation of the vehicle over the lifetime of ownership. CarEdge has good resources for that: https://CarEdge.com/depreciation

If you follow these 4 first time car buyer tips and complete Deal School, you’ll be in a great position to purchase your first car. Buying a car, truck, or SUV doesn’t have to be as daunting as it once seemed. Just remember, knowledge is power!

Title Washing: How a Vehicle Without Airbags Was Sold (7 times) with a Clean Title

by | Last updated Apr 25, 2023 | Car Buying, Used Cars

Car dealers catch a lot of flack. The annual trustworthiness of professions poll from Gallup ranks car salespeople at the bottom of the list. To suggest that car people aren’t held in high regard would be an understatement. It doesn’t help when car dealerships engage in the practice of title washing and other consumer unfriendly practices. All too often we see a story on the evening news that reminds us of why car dealers are often considered the “scum of the earth.”

Having been in the car business for 43 years, I know that not all car people are bad people. Actually (and this may come as a surprise), most car people I know are good, decent, and humane individuals (far from the characterization they receive at work). However, as with all things in life, a few bad apples can ruin the bunch, and the same holds true for car dealers.

Recently I came across a news story out of Georgia that told the journey of a fateful 2015 Toyota 4-runner that was sold 7 times over the span of 5 years in 5 different states; each time with a clean title. The kicker is, the car didn’t have side airbags in it. How could it possibly have been sold 7 times in 5 different states (each with a clean title) even though the car didn’t have side airbags? The answer: title washing.

What is title washing

Washing a vehicle title is the process of taking a total loss vehicle (when it would cost more than a car is worth to repair it) and  physically moving it to another state where the title can be recognized as “clean,” instead of salvaged or branded. When a vehicle sustains severe damage, insurance companies are required to update the status of the vehicle’s title to reflect its condition, however, each state has different requirements for what must be reported, and to whom.

For example, Texas state law allows vehicles that have been in an accident to retain a clean title without proof that critical safety repairs have been fixed. In the case of our 2015 4-runner from Georgia, the side airbags had never been replaced, however the vehicle was sold with a clean Texas title at a Progressive Insurance vehicle auction. It was then transported to Georgia where it was bought and sold multiple times to unsuspecting dealers and buyers.

Title washing is unfortunately all too common in the car business. Since each state has different legal requirements for what information (and how much information) must be reported to the local government we end up with situations where nefarious people can take advantage of loopholes across state borders.

Title washing is a federal crime, however enforcement of this law is few and far between. A quick google search of “title washing crime” returns many results, but it quickly becomes clear that enforcing title washing laws across all 50 states is a task too large for any existing federal government agency. State governments are then tasked with enforcing these laws, however many are lax in their pursuit of title washers.

With one out of 44.6 cars having a washed title, the state of Mississippi has the worst title washing problem in the country. Siloed databases, different definitions of “salvage” or “branded” title, and myriad other reasons explain why Mississippi (and many other states) face major challenges from title washing.

How do you know if a vehicle’s title has been washed

The unfortunate thing about title washing is that frequently many people in the buying process have been fooled by what they thought was a clean title vehicle. For example the story of our  2015 Toyota 4-runner in Georgia was initially sold to a dealer that did not know it had previous accident history and was missing airbags.

The owner of the first dealership that sold the vehicle to a consumer ended up refunding the customer once the customer learned that the vehicle didn’t have side airbags (something their mechanic) was able to uncover.

This simply goes to show that you have to be your own advocate during the car buying process and you can’t assume that anyone is looking out for your best interests. It’s an unfortunate reality, but it’s the truth, and it’s especially true when considering the purchase of a used vehicle.

How can I protect myself

Buying a used car is a bit like gambling. You’re making a bet that the car you are buying is in good mechanical condition and won’t turn into a clunker overnight. How can you increase your odds of making a good bet? It’s easy; get a pre-purchase inspection done before buying any used car.

A pre-purchase inspection is non-negotiable when purchasing a used car. It’s unfortunate that there is no other way to protect yourself from accidentally purchasing a vehicle with a washed title, but the best thing you can do is take proactive steps to minimize the risk.

In addition to an inspection (which we really think is a must if you are purchasing a used vehicle) you can (and should) also refer to the vehicle’s Carfax or AutoCheck report. Bear in mind that Carfax and AutoCheck reports are only as accurate as the information they receive, however they may indicate that a vehicle has had a previous accident, and if it does, that can be an indication to you that the vehicle is not worth purchasing.

Another option that we strongly recommend you consider is contacting your insurance company and asking them if they have any records on the vehicle you are considering. You will need to share with them the VIN, and they should be able to provide you with even more information than the Carfax report.

BMW Finally Got Caught! $18M In Fines & This Is Just the Beginning

by | Last updated Oct 2, 2020 | Dealership Operations

The Securities and Exchange Commission recently announced $18M in fines that BMW and two of their subsidiaries must pay for having provided misleading and inaccurate retail sales information to their investors.

The SEC report reads:

According to the SEC’s order, from 2015 to 2019, BMW inflated its reported retail sales in the U.S., which helped BMW close the gap between its actual retail sales volume and internal targets and publicly maintain a leading retail sales position relative to other premium automotive companies. The order finds that BMW of North America LLC (BMW NA) maintained a reserve of unreported retail vehicle sales — referred to internally as the “bank” — that it used to meet internal monthly sales targets without regard to when the underlying sales occurred. The order also finds that BMW NA paid dealers to inaccurately designate vehicles as demonstrators or loaners so that BMW would count them as having been sold to customers when they had not been. Additionally, the order finds that BMW NA improperly adjusted its retail sales reporting calendar in 2015 and 2017 to meet internal sales targets or bank excess retail sales for future use. As a result, according to the order, the information that BMW provided to investors in the bond offerings by BMW’s U.S. financing subsidiary, BMW US Capital LLC, and to credit rating agencies contained material misstatements and omissions regarding BMW’s U.S. retail vehicle sales.

https://www.sec.gov/news/press-release/2020-223

After having spent 43 years in the car business (many of which with BMW North America), I can unequivocally say these practices are routine and commonplace within car dealerships. Fraudulent behavior like this is not limited to BMW. Every manufacturer I have ever worked for encourages this.

When I worked for Penske Automotive Group we were explicitly instructed not to fudge any numbers. If our BMW rep asked us to “pad the numbers” one month, we didn’t. Penske didn’t want to participate in that type of activity. They were the exception to the rule.

As a dealer you have very little choice but to “play the game.” As I’ve talked about in other videos and guides here on the blog, car dealers don’t make much of anything when they sell vehicles. Instead, they make their money from factory incentives and from selling finance and insurance products.

With that in mind, it’s clear why dealers “play the game.” If you have a $250,000 incentive that is based on the number of cars you sell in any given month, and the person writing you that check (BMW) is encouraging you to “fake” sales so that you can actually attain the bonus, what would you do? The answer is simple.

Car manufacturers are happy to pay out giant monthly bonuses to subsidize their dealers, but only if they hit certain sales volume thresholds. This is because manufacturers are then able to report better than expected sales volumes to their investors.

How many fraudulently reported vehicles are “sold” in any given month? In any given month we would designate 15 Mini Coopers as “sold,” even though they hadn’t been. In that same month we may have actually sold 35 or 40 vehicles. Each month, upwards of 20% of our “sales” were fake.

It’s surprising to think that BMW was only fined $18M. Considering a nontrivial amount of their sold inventory is not actually sold, you would think the fine should be $180M instead of $18M.

Fiat Chrysler paid $40M in fines a few years ago for similar practices. Regardless of who it is, it’s clear that the fines aren’t enough to stop the fraudulent behavior.