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What You Should Know About Vehicle History Reports

By: Jack NeradPublished November 11, 2021

The inability to be sure of what you are actually buying is one of the biggest headaches involved in a used-car purchase. Often you are laboring in the dark. The car might look good, but it could have mechanical problems, hidden damage, or a lien on its title. A lack of knowledgeon these potential issues can be very costly. 

The good news is there is something you can do to throw some light on the entire subject. You can obtain a vehicle history report on any car you are considering, and that report can go a long way to keeping you out of the dark during a used-car purchase. Even better, many times, a Carfax vehicle history report will be provided to you for free by the dealer on for-sale listings here on Usedcars.com. Just look for that notation on the listing.

"Getting a vehicle history report is a good idea whenever you're buying a used car, particularly from a private seller, or when selling your car to a private buyer," said Jennifer Brozic of Credit Karma. "If you want to buy a used car from a private seller, a vehicle history
report might alert you to problems you didn't realize existed." 

To show you their value, you should be aware that many dealers buy vehicle history reports in bulk and consult them as they decide to buy a car or take it in trade.

"A very history report is a valuable tool for dealer and car-buyer alike," said Eric Charles, an Illinois-based used-car dealer. "It helps you to discover issues with a vehicle that might not be
apparent on the surface."

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What Is a Vehicle History Report?

A vehicle history report is not a suit of armor that will protect from every problem a vehicle might have. Like most things, it has its limitations and must be employed in combination with a good inspection and common sense. But the information it puts at your fingertips will answer some crucial questions for you — including several that you probably would not think to ask — and those answers can give you a good indication of whether the individual used car under consideration is worth the expenditure of your hard-earned cash.

A vehicle history report can be considered the used car's resume. You might hire the used car for the important job of being your next vehicle, but before you offer up the job to it, you need to know more about it. Like a resume, a vehicle history report will tell you what the car has done, how long it has been around, and what experiences it has had. Unlike a resume, though, the vehicle history report might also tell you negative things about the car, the kind of things you might skip if you were preparing your own resume.

If you want some idea how important it is to get a vehicle history report before you buy a used car, you should know that the Federal Trade Commission (FTC) recommends doing just that. Since the FTC is one of the key federal agencies involved with consumer complaints that
recommendation should be taken seriously. 

"Vehicle history reports can tell you a lot about a used car," an FTC spokesman said. "A report might include ownership history, whether the car was in any accidents, its repair records, and whether it ever was declared as salvage."

All of that is very useful information for determining if a particular vehicle is one you want to spend your money on.

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What Does a Vehicle History Report Contain?

Not all vehicle history reports are the same. In the past few years, more and more companies have entered the arena offering reports. Many compile information that is commonly available from public sources. And like anything else, some are more reliable — and more detailed —
than others. 

To get a vehicle history report, your first step is to provide the service with the car's vehicle identification number. That number, commonly referred to as the VIN, is the unique identifier for that vehicle, much like your own Social Security number. No two vehicles have the same VIN.

Once you have supplied the VIN, the vehicle history report suppliers will search their databases to assemble a comprehensive look at key items that can help you determine the advisability of purchasing the vehicle. 

Typical vehicle history reports include these items:

  • Status of vehicle title. You don't want to purchase a vehicle whose ownership is in question or is the subject of a lien. The vehicle history report should tell you if the title is encumbered in any way. Making sure you get a "clear title" is job No. 1 in purchasing a used car.
  • Number of owners. Without naming the names of individuals, the report will show you how many owners the vehicle has had and generally where they are located. If a car changes hands often, it could be a bad sign. Many used cars are advertised as being "one owner" or
    "for sale by the original owner." That could be an indication the car delivered good service and has been well taken care of.
  • Rental or fleet use. If the car was part of a large fleet or if it was used as a rental, the vehicle history report should point that out. Some consumers are wary of fleet and rental cars fearing that they might have been abused because their drivers didn't own them. The counter to this argument is that fleet and rental cars are often better serviced and maintained than the average personal car. For example, a rental car is typically inspected each time it is returned from a rental.
  • "Lemon law" label. Most states have "lemon laws" that protect car buyers from faulty products. Typically, to be labeled a lemon, a vehicle must have been returned for the same repair a number of times without resolution of the problem. So labeled, the vehicle is often "bought back" by the manufacturer, and it can often end up in the used-car market. It is not illegal to sell a "lemon," but its status must be disclosed to the buyer. A vehicle history report can help you discover undisclosed lemons.
  • Salvage history. Vehicles that have been in major car accidents and whose cost to repair is greater than their value when repaired are often reported as a total loss to the Department of Motor Vehicles or Secretary of State's office. Their titles are then "branded" as "salvage." As with lemons, it is not unlawful to sell a salvage car, but its salvage "brand" must be disclosed to the purchaser. A vehicle history report can identify a car with a salvage brand.
  • Flood damage. Cars that have suffered water damage in a flood might have hidden problems that can surface after purchase. Flood-damaged cars are often transported from the state in which the flood damage occurred, re-titled in a different state, and sold as used vehicles, many times without disclosure. If the flood damage was reported to the state of the original title, it would be noted on a vehicle history report.
  • Vehicle mileage/Odometer reading. Part of a vehicle's value is determined by the number of miles it has been driven, a reasonable proxy for use and wear-and-tear. Vehicle odometers, which track the vehicle's total mileage, are not supposed to be tampered with, but such tampering frequently takes place. To help discover this illegal practice, many vehicle history reports will indicate the last odometer reading reported to the state, typically when the car changes hands. If there is a significant discrepancy between the number on the vehicle history report and the mileage recorded on the car's odometer, it is a sign the vehicle has been tampered with.
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How Do You Obtain a Vehicle History Report?

Vehicle history reports are available from several private companies using data provided at least in part by the National Motor Vehicle Title Information System. One way to access a vehicle history report is to visit the NMVTIS website, vehiclehistory.gov. You can also use privately operated providers of vehicle history reports. Three of the best known ones are
Carfax.com, Vinaudit.com, and AutoCheck.com.

Choose one, enter the car’s VIN, which is typically carried on the car's numberplate at the base of the windshield, and pay the provider's fee to learn the car's history. Reports from the big three providers like Carfax.com often additional information that can include accident and repair history. 

It is important to get the correct information and not miss important items. In this regard, Carfax offers a "Buyback Guarantee" that can help protect consumers from unknowingly buying a vehicle with a DMV-issued title "brand," such as Salvage, Junk, Rebuilt, Fire, Flood, Hail, Lemon/Manufacturer Buyback, Not Actual Mileage, or Exceeds Mechanical Limits. If you find that any of these title problems were reported by a DMV and not included in this report, Carfax will buy the vehicle back according to the terms and conditions of the guarantee.

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Vehicle History Reports Are Not Perfect

It is important to note that, as useful as vehicle history reports are, they don't offer a complete picture of the car you might potentially purchase. As Matt Smith of CarGurus said, "Vehicle history reports aren't foolproof, either. Similar to credit reports, these documents are only as good as the data reported, so if a driver has a car accident and opts to repair the damage him- or herself, that accident won't appear on the vehicle's history report."

The FTC warns that a vehicle history report is not a substitute for an independent vehicle inspection. Before you buy a vehicle, it's a good idea to get the vehicle inspected by a skilled technician to ensure it does not have hidden damage or will be the subject of expensive repairs. With continued inflation in the price of vehicle maintenance and repair it is easy to underestimate what a particular "fix" will cost you. Further, if you are obtaining a new car, getting it fixed is probably the last thing you want to do.

The combination of a comprehensive vehicle history report and a thorough inspection by a qualified mechanic will take a great deal of the worry out of the used-car purchase process. You might spend $100 or so for the services, but that is a small price to pay for peace of mind.

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