How Carfax works, and why you should take it with a grain of salt

You see that fox all over the place nowadays. On TV commercials, on billboards, on buses, peeking out the windows of car dealerships, in inflatable form standing next to Wacky Waving Inflatable Arm Flailing Tube Man. He's the Car Fox, his reassuring smile telling you that your used car purchase will be worry-free if you just read the Carfax before you buy. It tells you everything you need to know about any car on the planet. It's a magic document... or is it?

It's not, and the reason why is posted right at the bottom of every Carfax:

What that means is that Carfax is only as good as the sources sending them information. They have three primary sources: State title agencies, police reports, and repair shops. The title agencies send them owner history and report branded titles. The police reports inform them of accidents or theft. The repair shops handle everything else.

What's this mean in practice?

The title reports are pretty darn good since they simply copy what's on the vehicle's title. It may not capture every single change of ownership, but Carfax will definitely tell you if the title is branded salvage/reconstructed/flood etc.

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The rest of it though? Well, that's subject to a big helping of luck, cleverness, and good old human error.

I'll start with the big big problem with used cars that Carfax is supposed to solve: accidents. In my experience dealing with used cars they're almost never reported by anyone but police departments. If someone gets in a wreck on the Pennsylvania Turnpike and the PA State Police respond, you can be sure the accident is going on the Carfax. How about the smaller police departments? That's a crapshoot. Officer decides not to file a report? No accident on Carfax. Or if he does file a report, but the Wampum P.D. stores their accident records in shoeboxes stacked inside their holding cell that hasn't seen an occupant since the Ford administration, Carfax is never finding out about this accident. Only computerized records are shared with Carfax, and the detail of those varies by police department. Some will report the severity of the wreck and whether the airbags were deployed. Some won't.

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But wait, there's more! When the Wampum P.D. finally does computerize its records, they'll suddenly report everything to Carfax. I've seen this happen several times before- someone buys a used car with a clean Carfax, and two years later suddenly it's got a wreck on the history from a year before they bought it. It'll be noted on the Carfax entry by the nice little disclaimer "Carfax started reporting this information on (whatever date the records were uploaded)."

Doesn't the body shop report the repairs from the accident to Carfax? Usually not. The majority of body shops don't report any records to Carfax at all, and when they do, it'll say something like "Vehicle serviced. Front bumper, fascia, headlights, grille, and Johnson rod replaced." What it doesn't say is "Accident Reported." Carfax reports this as a repair, not an accident.

And then there's the accidents that go completely unreported. If you run your car off the road in the middle of the night and wrap it around a tree, call Uncle Clem to haul it out for you and have him fix it in his backyard, neither the police or Carfax have any idea the car was ever wrecked. Your car may be three different colors now, held together with Bondo, duct tape, and whatever bits and pieces were lying around Clem's garage floor, but it's got a spotlessly clean Carfax- and when you go to sell it on Craigslist a few years later, advertising it as "One Owner! Clean Carfax!" is absolutely the truth.

That brings us to the last part- repair shops. Most larger shops, dealerships included, report their repairs to Carfax for ease of record keeping. Some will send over an itemized list of what was repaired, while some will only say that the vehicle was in the shop. Most smaller shops don't report anything. This means you cannot rely on a Carfax history to determine if a car was properly maintained or not.

Now here's where it gets interesting- reports from shops are where Carfax receives most of its information about mileage. Some of this comes from state DMV records as well, but many states do not share their odometer readings with Carfax. What's this mean for you? The mileage records are only as good as the people reporting them. If you take your car in for a 45,000 mile service and the technician types in 54,000 miles by mistake, Carfax will flag the car as a potential odometer rollback when the tech records your 50,000 mile service a few months later. Here's another common scenario: a mechanic puts three or four repair records into the computer at the same time, but accidentally types the mileage of the '97 Camry into the entry for the '08 Mustang. Whoops!

So what's the take-home message from all this? Carfax is a great tool but it isn't perfect. Definitely ask for a copy of the Carfax, and if a dealer ever refuses to furnish one, walk away. But remember- when you buy a used car, what you see is what you get. Even if it's newer, always have it inspected by a mechanic you trust, and make sure they check for evidence of prior accident repairs.