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.
Great to see you guys up and running now. Watching today’s video now. The site looks good!
Thanks for the kind words, Kevin. Big things coming over the next few weeks! We appreciate your support.
Noticed that in your list of manufacturers with semiconductor shortage issue, Hyundai and KIA were conspicuously absent. Are they semiconductor (Korean?) manufacturers? Thanks for your wealth of info.
Thanks to you and your dad for giving us newbies to the used car arena an armful of knowledge!
I am happy that you guys tell it like it is, please, stay this way! My wife and I are looking to purchase our next set of cars next april and we are learning a lot from you, we feel more confident if we are to step into a car lot.
I reviewed car max report As it was listed owners -2
Service report- ?
I recently selected a 2013 Silvarodo pickup.
One of the first things I noticed was a long dent in the driver’s door 3/4 ways down. No one inspected or corrected Automax or Carmax.
This tells me that neither is reliable.
I no longer trust car fax. My grandson bought a used car and car fax showed no major repairs or issues. Turned out car was a lemon. It had a replaced used engine that was put in and never reported. We found out it had front end damage and replacements and never reported. Very disappointed, bad experience for first time buyer.