Why dealers love Carfax (and why you should be skeptical)

Most people are familiar with the catchy Carfax commercials. “Show me the Carfax!” a couple says in one older commercial, and the salesman pulls out a puppet of a “car fox.” The car fox has even become the Carfax mascot.

While you may feel confident asking your dealer to show you the Carfax, there may not be must to show you.

Unlike the reluctant salespeople in the commercials, car dealers love Carfax. This is because only a small percentage of car accidents show up on Carfax. And thanks to the ubiquity of the commercials and the catchy slogan, consumers are familiar with Carfax reports and trust them.

How accidents get missed

Carfax claims it receives data from more than 100,000 different sources, but an accident can be missed on a Carfax report in a number of ways. If the police aren’t called to write an accident report, that information won’t end up on a Carfax. If a police department’s record system isn’t computerized enough, Carfax can’t access it and those accidents are missed.

Consumer Reports found in a study that reports like those from Carfax were also incorrect for vehicles that incurred serious damage but were not declared a “total loss.” These “clean-title wrecks” are popular at auctions because buyers can repair the vehicle and resell it to consumers who wouldn’t know about the damage.

In Pennsylvania, car owners have the right to take a partial settlement on a “total loss” vehicle where they keep the vehicle and their provider pays for partial damages with a buy-back/retention letter as proof. That owner can apply for a salvaged title, repair the vehicle, have it inspected, and obtain a reconstructed title to keep driving the car. It is possible for Carfax to miss this information if the car is later sold to a dealer.

A dealer can probably tell if the car has been in an accident, but if there is no traceable evidence of the incident, what incentive do they have to report it if they will lose money on the sale?

If you are buying a used car, consider requesting an inspection on the vehicle. Check the title information for anything fishy and don’t skip out on the test drive.

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