Vehicle History Reports (VHR’s) are a great tool for evaluating a used vehicle – Know their limits though

CarFax and AutoCheck have both done a great job adding some certainty to the uncertain task of evaluating a used vehicle. Prior to their arrival on the scene some years ago, consumers were somewhat on their own in evaluating the type of information these reports provide and had to depend on the vehicle seller or dealer to fully disclose what they may or may not have known. They provide checks on the information they obtain on total losses, structural damage, airbag deployments, odometer discrepancies, accident reports, recalls, various title brands like lemon buybacks, as well as odometer and salvage title branding and other important information. However, the information is only as good as the source and the amount of sources that provide information to them. Best said, they don’t always have all or the most accurate information on any particular used vehicle. It is certainly better than nothing, but don’t let it give you a false sense of security in the condition of the vehicle.

One of the advantages of CarFax over AutoCheck is the service history database it has built with participating dealerships and service outlets. I was once asked to evaluate the two providers using the dealer’s actual inventory. I actually found that from a consumer’s perspective, CarFax’s service history information is a critical advantage in determining how well a vehicle was maintained. However, like other information, not all information is reported or known. So just because it isn’t on the CarFax, doesn’t mean the car wasn’t necessarily serviced or if it was serviced, that the job was done thoroughly and properly. A good reason to ask for service receipts from any seller.

Most importantly, please keep in mind that neither VHR provides any information on the current state of the vehicle’s mechanicals, safety systems, or condition. That is still an uncertainty that you as a car buyer or seller in the case of a remarketer/dealer that must be determined. A vehicle history report is no excuse for not having a pre-purchase inspection if you are a consumer or the proper inspection done by either an experienced remarketer and/or auction/service partner in the case of those in the remarketing and dealership world.

It should be noted, dealers usually pick one of the two companies to subscribe to, often based on the current service and pricing being offered. Most dealers have access to both reports though, so if you are buying from a dealer who only provides one on their webpage, I always recommend asking for a copy of the other and comparing them. There are differences in some cases in what reporting agencies they get information from and how well those databases are maintained and updated, so the reports can be different. Checking both is highly recommended, as you would not want a surprise on the one you don’t review to come back to bite you when you go to sell or a problem arises.

One of the frustrations as a seller or dealer that I have observed is that sometimes information isn’t reported in a timely manner to the databases the VHR companies use or the vehicle is resold before things hit a report. Some of this information can be critical stuff, like a lemon buy back or salvage title in the vehicle’s past. You pull the report in June and then 6 months later, information is reported from before when you acquired or sold the vehicle. This often doesn’t become an issue until you go to sell the vehicle or a customer trades it in and gets a surprise. This often results in negative feelings by the end consumer and others involved in the sales history as people go back to others looking for financial assistance many times when this happens. They may have done their research as a seller by reviewing the VHR, but they take a hit for the late reporting outside their control. There are best practices around how to manage this, but that’s a topic for a more direct discussion.

Once you review the VHR and most importantly, have your pre-purchase or pre-sell inspections done, which again are critical for fully understanding what you are buying or selling, you have to decide if the vehicle is still worth buying or in the case of a seller, what is worth fixing and what you should just disclose. I have worked on some good pricing models in the past for how to account for certain reporting on VHR’s that can be used when a vehicle doesn’t have a clean report that may be of a value to you. Nonetheless, we are all better off today because of VHR’s, even if they sometimes bring doubt into the used vehicle question, but knowing their strengths and weaknesses is the key to making the best buying and selling decisions. I hope this article has provided some understanding into both of those that may be useful to you in the future.

About the author:

Jason Herman is a 23-year veteran in the remarketing and automotive finance world and an avid car enthusiast. Having managed bank and fleet lease end operations, 1st and 3rd party remarketing, residual value setting & risk mitigation, and the sale of well over 1 million off lease & repossessed vehicles in his career, he enjoys providing guidance and expertise to both those new to and experienced in the automotive finance industry, as well as helping end consumers purchase or sell vehicles. Should he able to help, Jason can be reached at Jason@carguy4u.com.