By on May 3, 2013

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Steve,

You often write about the importance of evaluating a car’s history before purchasing it. We all have access to Carfax and Autocheck reports, but what are some things on those reports that trigger your red flag?

Here are five red flags that always give me a sense of caution whenever investigating the history of a vehicle.

1. Short ownership history

If I see that a vehicle has been most recently owned for less than 18 months, I give it a big fat negative.

This is in part due to the fact that I have only a limited time period to inspect vehicles at the dealer auctions I attend. At most auto auctions you will have between 100 to 5000 vehicles available on a given day. So you have to pare down your list of potential purchases, and refine it by developing a criteria that works.

Sometimes a short ownership period simply reflects an unwanted family hand me down. But the overwhelming majority of the time, these short-term keepers will be traded in with a chronic problem or three that will take $$$ to solve. I don’t want my money to sit in a repair shop. So I avoid the risk that comes with purchasing a vehicle that likely didn’t make the prior owner happy.

2. Too many years in a region where rust issues are predominant.

There is a wide swath of the USA, from the northern Midwest all the way up to Maine, that is particularly heinous when it comes to rust. Nobody in the South knows how to treat body rust and due to the related electrical issues, I try to avoid these models whenever possible.

3. Too many accidents

I can deal with one or two. However once you get to the four to six accident level, you are either dealing with an abusive driver or a neglectful owner. Sometimes both. I avoid those cars.

4. Several recent dealer visits for an expensive issue

A listing that shows ‘transmission inspected’, followed by ‘transmission fluid serviced’ in an older car will wind up creating a red flag as bright as the fluid. Engine issues, all-wheel-drive systems, and electrical issues will all raise a red flag of concern.

5. Too many registered liens

Here in the South, folks who are short of cash will pawn their vehicle. I can deal with one lien registered. But when I start seeing several of them over the course of years for a more expensive vehicle, I won’t bid on it unless I can confirm that the vehicle has been maintained reasonably well over that time.

Now here are five things I absolutely love to see on a Carfax or Autocheck history.

1. Dealer maintenance

I will pay anywhere from $800 to $2000 more for a vehicle that has been dealer maintained since day one. These cars are usually the most capable of holding the note, and the maintenance records you can give to your customers makes these vehicles an easy sale.

2. Location

Yes I do pay attention to where the vehicle has been registered over the years.

On average, a one owner car that has resided in an affluent area of town will be in better shape than one that has resided in an area infested with heavy traffic and crime. This isn’t an absolute, but a nice location usually offers a garage and a greater means to buy the maintenance services that the car needs.

3. Long-term ownership

A longer ownership period usually correlates to a vehicle in better overall mechanical condition; especially when it has been maintained at a dealership.

There are plenty of folks who will neglect maintenance and try to pass the buck to the next owner . When you have the fortune (and misfortune) to look at tens of thousands of vehicles a year, this variable tends to be pretty easy to figure out.

4. No liens

Cash purchases often times reflect an owner who has the means to take care of issues instead of an overwhelming need to try to ride them out.

5. Few to no accidents / moderate to minor damage

Substandard repairs can ruin a cars worth. If the vehicle has a severe accident history, I will only dig deeper if the vehicle represents something I would truly value for my lot. Conservative drivers tend to be conservative owners and, although Carfax and Autocheck offer extensive information, they don’t document everything.

If multiple accidents of moderate to severe damage have been recorded over the last few years, I will avoid that vehicle.

Finally let me offer you three surprises when it comes to Carfax and Autocheck histories.

1) A salvage history is not always a bad thing.

I use a seven year cutoff. If a car has been totaled within the first seven years of its life, I will usually drop it from my list of cars to buy.

However a lot of vehicles that have experienced minor damage will often be totaled out and then resold to a dealer at a salvage auction. I have purchased several older vehicles that were totaled without any form of frame damage or airbag deployment. The cost of repair was so high for body parts and minor components that the car was simply not worth fixing. Even though it ran perfectly fine.

Orphan brands are particularly good salvage buys if, and only if, you know what you are doing when it comes to inspecting the vehicle.

2) ‘The North’ is not always a bad thing.

It pays to know your geography and the potential affluence contained within it. Many northern cars are as rust free as their southern counterparts thanks to an indoor garage and minimal exposure to inclement weather and chemicals. Again, these vehicles are good buys only if you know how to properly inspect and appraise a given vehicle.

3) Failed emissions mean nothing, unless it is recent and you live in an area that requires it.

If a vehicle failed emissions a few years ago, I don’t care. Emission issues are often due to the catalytic converter and related sensors living out their useful lives. These can be replaced at a reasonable cost most of the time.

Still, in some areas of the USA, a recent emission issue can be expensive and tricky to fix. If you happen to live in an emissions county or state, pay close attention to the most recent emission inspections.

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37 Comments on “Hammer Time: Carfax, Red Flags, And Rolling Turds...”


  • avatar
    28-Cars-Later

    I read through this and I got an image of you playing chess against the car from hell.

  • avatar
    DC Bruce

    Regarding salvage titles, I believe some states, including Maryland, require the car to be declared a total if the cost of repair exceeds something like 40% of its value. I supposed the concept is that a car that has been very extensively repaired cannot be fully restored. However, if a car is, say 10 years old and has low mileage (like my car, which is 12 years old (10 of them under my ownership) and has 69,000 miles) this rule doesn’t really make so much sense. Given that my car is a BMW, some suspension damage would probably result in the car being “totaled.”

  • avatar
    Mykl

    Great article, I’ll be using it as a reference in the future.

  • avatar
    Type57SC

    I’d second that thanks for very useful posting

  • avatar
    Vinsanity

    Sorry, but the fact that the previous owner shelled out extra $$$ over the years to have their car serviced at a dealer instead of an indie shop isn’t worth $800-$2000 to me.

    • 0 avatar
      toxicroach

      You are assuming they had it serviced at the indy shop. Maybe they did, maybe they didn’t have it serviced at all. He cannot know this at auction time. This is all about placing bets based on incomplete information, not being right all the time.

      • 0 avatar

        I agree, this is a key point. I avoid going to dealer if at all possible. For one thing, I switch to synthetic oil right away (before the accumulated build-up makes hazardous). Sometimes, it’s unavoidable, if cabin electronics is involved, but I will definitely not let a dealer touch my car for routine maintenance. I made an exception once with RAV4, and regretted it ever since. The stupid monkey applied WD-40 on the rear door hinges — for no reason, and unasked — after which the hingest started to attract dust and creak. The car creaked until I got rid of it. However, just as Toxic Roach says, Steve cannot know what was up. BTW, I sold RAV4 to dealer and they expressed no interest in my maintenance journal (in the previous cars the journal was in the back of the manual). Obviously the next owner did not get this information either.

    • 0 avatar
      yesthatsteve

      It isn’t the perceived quality of service that’s important here – it’s the existence of the service records. Carfax has contracts with the big vendors of computer systems for dealer service departments. A much smaller percentage of independent shops use such systems, though some chains do.

      As a result, a Carfax report is more likely to show dealer service than work at an independent shop. Without access to paper receipts or an owner’s own written records, it’s the best way to document an actual service history.

  • avatar
    davefromcalgary

    I’ll second that salvage is not always a bad thing. I have had a 98 Grand Am and 2002 Alero, both blew the bags but had relatively little damage otherwise (cosmetic front bumper, no frame damage). Parts were readily available. They were excellent buys for me from insurance, and in 4 years I put 200,000 kms on the Grand Am and in 3 years, 150,000 kms on the Alero, and they have honestly been the most solid and bulletproof of the 6 cars I have owned.

  • avatar
    NeinNeinNein

    For sure–all this homework saves time, $$ and heartache in the end.
    I would say if you’re buying a car–especially anything other than a Honda or Toyota or other reliable make—and even if that–get a pre purchase inspection.
    Also, I too buy used cars from affluent folks in better parts of Southern California with maintenance histories.
    I’ve said no thanks to what looks like a great deal on cars when I find out its located in Santa Ana or some other not so nice burb–especially when they say –oh yeah, well maintained. You have oil change records or maintenance / repair history? No man, but its done. Yeah…..thanks anyways I tell them and run.

    • 0 avatar
      SoCalMikester

      Theres some guy there that always has incredible salvage deals on Craigslist.

      Cars look great, always SUPER cheap and low mile. And somehow the salvage is always due to a “scuffed bumper” or something equally trivial.

      Really? On a 2010 Escalade? Ive always wanted to know the real story. Title washing? VIN switching? Stolen? Sent to Mexico to repair cheap?

  • avatar
    Mr Imperial

    One carfax report made me chuckle when shopping for a Camry for the wife:

    The report said that this particular car had been in an accident with “Left Side, Top Side, and Right Side damage” but of course repaired.

    Quite a creative way to state that it had been in a roll-over collision!

    We kept shopping.

  • avatar
    mfgreen40

    Steve – I really enjoy your articles. Late model rebuilders are the only thing I and family members have driven for the last 20+ years. We still have 5 of them. We do a lot of the repair ourselves. I suppose the difference is we dont resell, just drive them. I can understand being upset if one paid near full price for a rebuilt car, but bought right, I see nothing wrong with them.

  • avatar
    icemilkcoffee

    Well, here in CA, I pretty much use the smog test as the baseline test. Any car that failed the smog test most likely has some issues to sort out. I pretty much just look at how well a car starts from cold, and whether it passed the smog test. Those are the two biggies in my book.

  • avatar
    sco

    Wow, if you could get beyond salvage title and failed emission test, there’s a world of cheap used transportation. Agree with the salvage title issue. The repair costs of even a minor rear end collision could total many 7-8 year-old cars. If you’re going to keep the car long term then the tile is no issue- if not then expcet the next owner to get the same discount you got. Emissions may be a different issue. Here in CA standards are high and I thought catalytic converters were quite expensive.

  • avatar
    Flybrian

    Salvage History? Really?

    Here in Florida, any title brand must be disclosed to a customer in writing and a salvage brand is one that absolutely NO finance company will touch and some insurers even have problems with it. I just don’t see the rationale behind purchasing any vehicle with salvage history regardless of the price unless its for yourself or someone you personally know. In an age of people asking for Carfaxes on $1000 transportation, its just not worth it.

    And short ownership history? Again, keep in mind the sources Carfax and Autocheck are gleaming these nuggets from. I find that the transference of registration to another person in the same family even at the same address is technically another owner.

    Additionally, frequent change of ownership is simply the nature of certain vehicles. For example, I’ve never had a ’1-owner’ SLK of any type of age; most often, these things get purchased as ‘impulse buys’ for a spouse or daughter and get resold once that person realizes how impractical they are.

    • 0 avatar
      Steven Lang

      Flybrian, it depends on the market you serve and the clientele that comes to your door. Given what you told me, I would suspect your audience would be more metro than anything else. An SLK isn’t exactly a hot commodity out here in northwest Georgia.

      I don’t finance vehicles with salvage titles. But plenty of dealerships have bought and sold salvage vehicles, and when you disclose it using the appropriate forms, it really is not that big of a deal.

    • 0 avatar

      I managed to talk my way out of salvaging my own car once. My daughter hit the car upon something. I do not even remember what it was… It was rather minor collision, but we had to pay $2500. One headlight had to be replaced. The insurance tried to get us agree to have the car “salvaged”. At the time I had no clue what it entailed but I was afraid that the car would be uninsurable thereafter. So we argued until they agreed not to salvage it and pay for most of the repair. I think it was good as new, except that new headlight spoiled the effect. The old one was noticeably yellower. To this day I’m wondering what the heck it was. The car was continuously insured thereafter until the day I got rid of it, so they didn’t try to dump us. But I suppose that’s one way to have a salvage title.

  • avatar
    vvk

    You definitely have to read between the lines when it comes to CarFax.

    Lack of dealer maintenance on a BMW probably means the odometer has been “adjusted” to conceal the true mileage. You know, since dealer maintenance is free and extremely convenient.

    I would not buy a car from NYC or Washington, DC. These places are hell for cars.

    • 0 avatar
      krhodes1

      Dealer maintenance is only free for the first 4yrs and 50K miles. And you don’t get much of it with a roughly 18K OCI. My car will NEVER darken the dealerships door once I have to pay for it. I don’t drink coffee, so their fancy cappuccino machine is lost on me.

      I do however, keep record of every cent I spend on my cars. Each car has a 3-ring binder from day 1. Actually in the case of the BMW, 6mo before day 1 as I kept everything related to the order process and Euro Delivery in it too. I get top dollar and then some for my cars. Usually have a waiting list for them, actually.

      • 0 avatar
        vvk

        I am mostly referring to cars without available service history.

        BMW covers annual oil changes, bi-annual brake fluid changes, coolant changes depending on the model. The least one should see on CARFAX is four annual oil change visits, even for super low mile cars. Typically, you see at least 8-10 service visits.

        • 0 avatar
          JD23

          Given BMW’s recommended service interval, a low mileage car should not have more than four or five service visits over the life of the warranty.

  • avatar
    redav

    Fantastic article.

    Your insights are some of the most useful & practical on any car site I frequent.

  • avatar
    Lie2me

    Very good points. You are far more generous as to potential purchase candidates then I would be. I did however notice no mention as to the importance of who the previous owner was. There are a lot of former rental cars that populate the used car market. This is not necessarily a deal breaker, but certainly a flag of caution to look for signs of highly possible abuse to these cars. Just something that I see mentioned a lot under used car buying tips

    • 0 avatar
      RJM

      My last 3 purchases have been former rentals (due to my job moving me, I needed or didn’t need snow/rough-road capabilities). I’ve been very happy. Among other things, the rental companies are able to get the bare bones model (RAV 4 without roof rack or trailer towing package – neither of which I wanted) so it’s that much cheaper to purchase.
      I know why they are selling it – not because there is an annoyance they want to pass on to a sucker, but because they need to replace the car to maintain a new fleet.

  • avatar
    sportyaccordy

    Great article.

    Is there any way to buy a late 90s/early to mid 00s VW w/peace of mind???

  • avatar
    Oodie

    Short ownership could just imply someone like me with a severe problem when it comes to keeping cars… 10 months, 7 months, 10 months, 11 months… just to go through the last couple.

  • avatar

    Great article as usual Steve. I’m always tempted by the rebuilt cars myself, especially on say an older BMW where I know parts prices will quickly cross the limit to total a minor collision.

    But I usually shy away since I can’t seem to keep a car more than 3 years, and I’m always afraid I won’t be able to sell it along since most people don’t understand the nuances of a rebuilt title.

    Either way, good stuff.

  • avatar
    jimbob457

    I have had considerable luck over the years buying orphans, the scorned and the unloved on the cheap for my personal use. They can provide great low-cost transportation, but you have to do the research so your example is OK.

    A 1977 Pontiac Astre – same basic car as the Chevy Vega, but better made and with an iron motor block. A Vega became scrap metal the first time its aluminum engine overheated. Not so the Astre. I am not defending either car, but the Astre with its iron mail truck engine would at least get you from point A to point B. Ended up selling the Astre to an Ethiopian in a negotiation conducted in Italian – the closest thing we could find to a common language – my buddy spoke Italian as a second or third language as did the Ethiopian.

    I had two 1990 Sterlings. They were Rovers with a Honda Accord engine and drive train. The 1986-1988 models had horrible electronics that ruined the brand’s reputation. The 1989 and 90 models had decent electricals and were rather nice cars. Maybe, a bit too much Rover and not enough Honda, perhaps.

    I once purchased an AMC Pacer from a friend and had fun with it for a year or so. You don’t go unnoticed driving around in a car like that. Wayne’s World.

    I have had some good times driving some scorned and unwanted cars. Plus, it can be easy on the pocket book, as well.

  • avatar

    I’ve lived in the NY metro area most of my life. I’d never, ever buy a used car of any class or type that lived mostly in NYC. The roads destroy suspension, engine mounts, and shake the car to death.

    Once you get up to Westchester, Bergen County, or Fairfield, CT, you will find gentle suburbs, so that used 3 or E class is a way better deal than the identical car in Queens. Just make sure mom used it for the school run, not to ferry dad back and forth to Manhattan.

    Upstate a bit past the “money line” (outside NYC, returning back to the USA proper) the higher end car is usually last generation and decently maintained, but most of the market would kill for a new $6000 Accord and wouldn’t be picky as to “performance” other than “starts and holds five”. You know, the customer that our scribe knows well.

    You should have seen the pile of parts after my mom’s TL was fixed. Engine mounts, trans mounts, end links, etc….really amazing. Every rubber bit of the car needed replacement. Car is driven gently by two older folks….but in Manhattan, Brooklyn and Queens. Panthers have my undying respect solely because they survive here.

    I’d buy cars around Albany or Central Jersey, just far enough that they couldn’t easily be daily commuters to NYC.

  • avatar
    william442

    Buy new! ,

  • avatar
    Dave W

    As someone who has tries to keep cars for at least one year for every thousand dollars I spent buying it, (used to be 1y/$300, inflation has raised prices, and marriage has raised standards) I love seeing info to help with my infrequent buying experience.

    Having always lived in the rust belt, corrosion is something that scares me more then a salvage title. Unfortunately I have to disagree about garage kept cars in the north. Particularly heated garages, but any shelter that can raise the temp up to the point where the salty slush can melt, and any time it’s above ~-5 a warm car parked out of the wind will do it, the now salty water runs INTO areas you can’t easily inspect and rust suspension, frame, and any other hollow parts from the inside out. Admittedly it happens out in the open too, but the outdoor dwelling Accord I owned when I met my wife survived 2 years longer then the 2 year younger heated garage dwelling Accord my wife brought to our union. And I find it hard to believe that Hondas corrosion protection could get much worse between the 1st and 2nd generation design.


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