You're shopping for a used car and you think you've hit pay dirt. The car is only five years old, with low miles and a great price. You're about to make an offer when you have a troubling thought: Is the seller hiding any problems? Was the car ever in an accident? Who owned it before this seller?
Years ago buyers could only judge a used car by inspecting its mechanical condition and maybe leafing through the owner's file of service records. But thanks to improved record collection combined with the power of the Internet, the vehicle identification number (VIN) can reveal if a used car has a checkered past. Experts describe the VIN as a car's DNA.
Car buyers can purchase vehicle history reports from a number of different companies, some of which even concentrate on specialty markets such as trucks. The National Motor Vehicle Title Information System (NMVTIS) lists a number of the companies that provide its vehicle history reports, some of which cost only a few dollars.
NMVTIS provides title information drawn from participating state motor vehicle registries. At this point, 88 percent of U.S. DMV data is represented. Run by the federal Department of Justice, the system is the only one that's publicly available in the U.S. to which all insurance carriers, auto recyclers, junk yards and salvage yards are required under federal law to report on a regular basis.
Most vehicle history report companies work in a similar way. A used-car shopper types a VIN into the company's Web site and immediately receives a report on the vehicle's history. Most companies sell either a single report for a set fee or, for a higher price, a subscription to run multiple reports for a limited time, which is usually a month.
A vehicle history report provides information drawn from an ever-expanding variety of databases. Most importantly, the report tells shoppers if a car has a "branded" title. Branding means an insurance company has declared the vehicle a total loss and given it a salvage title because of an accident, flood damage or other catastrophic event.
Typically, the information on a vehicle history report includes a summary and an overall evaluation of the vehicle supported with details, dates and locations. The report makes it easy to see if the car has been registered in numerous states. Other information can include a description of the vehicle, number of previous owners, accident information, verification of recent mileage (which could include an alert for odometer rollback) and lemon and recall checks.
Some vehicle history report companies provide additional features or information. For example, AutoCheck provides a vehicle "score" — a number and a range — like 85 out of a range of 60-90. This shows how the vehicle compares to other similar cars built that year. Carfax reports sometimes have information other vehicle history reports don't list, such as service department records.
The mileage verification that a vehicle history report provides is especially important for buyers. Mechanics record the mileage each time there is a smog check, change of registration or other event in the vehicle's history. If the mileage recordings are not sequential, meaning that they get higher each time, it could mean someone rolled back the odometer.
Although it's illegal, a quick trip to a "spinner," who is someone who turns back odometers, could be worthwhile for an unethical seller. Turning back an odometer 10,000 miles can increase the sale price of a typical car by at least $600. And contrary to popular belief, it's easier to roll back a digital odometer than it is a mechanical one.
Test-Driving Vehicle History Reports
The editors at Edmunds.com have extensive experience using vehicle history reports. That's because we steadily buy used cars for our long-term test fleet. Additionally, as a test, the editors run vehicle history reports on cars known to have salvage titles to see what comes up. In nearly all cases, vehicle history reports from AutoCheck and Carfax have caught those problems and flagged the pertinent information. (NMVTIS wasn't fully up and running at the time of our tests.)
For example, we entered the VIN for a 1998 Corvette, which we knew had a lemon title. Sure enough, the vehicle history reports clearly flagged the problem by stating: "LEMON LAW VEHICLE. Repurchased by manufacturer."
In another case, an Edmunds employee's husband was about to buy a 1995 Acura. He test-drove the car and felt it was in good mechanical condition. However, a vehicle history report showed the car received a salvage title in 1996. When the seller was confronted with this information, he said, "Oh yeah, I thought I told you about that."
In yet another case, a vehicle history report for a test car listed an "accident involving left side impact with another motor vehicle." Apparently the accident was serious enough to report to authorities, but did not result in a salvage title. However, the report would show potential buyers that the car was in an accident. They could then check to see if the owner had properly repaired the damage.
As our informal tests showed, there are few major title or damage problems that slip through the vehicle history net.
"Occasionally, we do hear of a false positive on a vehicle history report, but it is rarely a problem," says John Van Alst, an attorney with the National Consumer Law Center, a nonprofit organization specializing in consumer issues. A false positive is when the report came back clean when, in fact, there was an accident or the omission of other pertinent information. Some vehicle history report services will buy back a car or provide a guarantee in such cases.
However, there is a time lag between when an event such as an accident occurs and when it is reported, Van Alst says. While going to NMVTIS is an "excellent first step," Van Alst still recommends car buyers take a vehicle to a mechanic and a body shop for inspection.
How To Use Vehicle History Reports
Vehicle history reports alert buyers to hidden problems with used cars for sale and can save them time when they're shopping, too. Edmunds.com recommends that consumers buy a subscription for one of the services as soon as they start the shopping cycle. Always run the vehicle history report before calling the owner and especially before driving across town to see the car in person. In most cases, online car ads will include the vehicle's VIN. Sometimes an advertised car will come with free access to its vehicle history report.
Also, keep in mind that dealers have subscriptions to the large vehicle history report services — usually either AutoCheck or Carfax — and will run a report for interested buyers. This becomes a valuable source of third-party information. If the dealer refuses to run a vehicle history report, or provides an outdated report, this could be a red flag.
Finally, keep in mind that a vehicle history report is only one step in the used-car buying process. A mechanical inspection is still a good idea. But running a report is a valuable first step that will save you time and money. And it could protect you from buying a car with a checkered past.
To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.