It’s practically a rite of passage for many Americans. You’ve scrimped and saved, researched and pondered, and now you’re ready to buy your first pre-owned vehicle. You show up, and there it is; the car. YOUR car. Sure, there’s a few scratches, maybe a tiny dent or two, but still, the sticker says it’s a steal, and it only has 35,000 miles on it!  So you pay the salesman, sign the papers, and drive off, happy in the knowledge that you saved a bundle and that all is well.

Or is it? According to a survey released by the National Association of Consumer Agency Administrators and the Consumer Federation of America, car-related complaints were the most common consumer complaint in 2009 as well as 2008. And while complaints about used cars are up, so are prices, as more people are buying used cars rather than new due to the economic downturn. So how do you sift through the used car market to prevent yourself from becoming one of those unfortunates who, in a day or month, develops problems with the car that you just bought which the seller assured you was a ‘gem?’ What information is out there to help inform your purchase decision?

“The key to buying a used car is really doing your homework,” said Rosemary Shehan, the founder of Consumers for Auto Reliability and Safety, a non-profit advocacy group dedicated to protecting car buyers. “What you see is definitely not what you get in many cases; with cars, visible defects are often the easiest for sellers to fix, so you really need to know how to look deeper to protect yourself and your investment.”

One source of information that most people are aware of is CarFax. Founded in 1986, CarFax receives information from more than 34,000 sources which is compiled into a database of over 8 billion records. The service was started to enable car buyers to determine if their vehicle had a branded title.  A “brand” appears on a Certificate of Title or registration card, and indicates problems in the vehicle’s history such as if the car was totaled, reconditioned, salvaged, junked or rebuilt.

CarFax reports are based on a vehicle’s unique, 17-digit Vehicle Identification Number, or VIN, and include title information, odometer readings, service history, and information on the number of owners. This information is updated throughout the life of the vehicle, and while most auto dealers will provide the CarFax sheet for free, you can order a report on any vehicle online for less than $35.

“We get our information from multiple sources, to help inform consumers about their purchase,” said Larry Gamache, Communications Director for CarFax. “Our focus is to inform consumers about the resale value of their vehicle, its performance, and its structural safety.”

CarFax reports are used by millions of consumers every year to obtain vehicle history information, but these reports are not without problems.

“At the end of the day, CarFax relies on humans entering information, and humans are imperfect,” said Diane Lade, a reporter for the South Florida Sun Sentinel who wrotean article detailing how these reports often omit critical information, such as when Dr. Roxanne Jeffries discovered that the Jaguar she bought had been in a head-on collision that caused $16,000 worth of damage. The accident was not reflected on the CarFax report the dealer gave her.

“When that Jag got in the wreck, the officer at the scene entered the VIN one digit off in his report,” Lade said. “So that information never got reported. CarFax was involved in a class-action lawsuit in 2007, basically because consumers were saying they had been lead to believe that these reports were foolproof and comprehensive, when they are not. And people still find unreported damage on their vehicles.”

In addition to pieces of a vehicle’s history that may be misreported by police, insurance agencies, or other sources that CarFax relies upon for data, there are other ways that critical information gets omitted in such reports. There is a lag time between when these events happen and when they get reported to CarFax or other vehicle history services, and sometimes these incidents don’t get reported at all.

“A title gets branded if the car is flooded, totaled, or stolen, and that would most likely show up on the CarFax report,” said Lade. “But if you got in an accident, and didn’t call the police or just paid for the repair out of pocket without reporting it to insurance, that would never show up on CarFax. Nobody would know, and the mechanics aren’t required to report it.”

The most important asset consumers have when buying a used vehicle is information. And while CarFax is a useful tool, it is not the only resource that car buyers can turn to.

“For what they’re worth, services like CarFax and VINCheck are fine,” said Jack Gillis, author of The Used Car Book, a book that is published annually that provides comparative information on used cars. “The bottom line is that in spite of all the information that is available on the internet, the purchase of a used car still requires tremendous diligence.”

But for Gillis, as well as other consumer advocates, the advantages of buying a used car can be huge.

“The benefit of buying a used car is that it will reduce your ownership costs by about 50 percent; the downside is that you are buying a mysterious product. But a lot of consumers are willing to take that risk, due to the enormous savings involved,” said Gillis. “And, more sellers of used cars are offering warranties, and that’s a good thing. Ten years ago, you were buying these cars as-is, no warranty. With the introduction of CarMax, you can now get a used car with some sort of warranty.”

One tip Gillis recommends is, whenever possible, to buy a vehicle from a friend. If you know the person selling the car, it’s more likely that you will be able to obtain the entire vehicle history. You can also ascertain more accurately how the car was driven, and what sort of person was taking care of that vehicle.

“Whenever you’re thinking of buying a car, or any used big-ticket item for that matter, always consider the source,” said Gillis. “If you can’t buy the car from someone you know, dealerships can be a good source of reliable cars, especially since often dealers will only keep the best cars, so that they won’t have to deal with the lower quality cars.”

Although dealerships can offer advantages over independent sellers, such as wider selection and warranties, buying a used vehicle from a dealership does not guarantee its quality, nor is it without problems.

“If you’re buying from an individual, you have more freedom. In California, there are some benefits to shopping at a dealership, due to lemon laws,” Shehan said. “As long as you can get an extended factory warranty, it might be worth it. But consumer reports have shown that rather than spending $1000 on a warranty, it’s better to spend that money on a better car.”

Additionally, experts across the board recommend used car buyers have their vehicles inspected by a reliable mechanic.

“Today’s cars have so much computerized equipment, and there are really clever rebuilders, who in some cases can put these cars back together even missing an airbag,” Shehan said. “So it has become even more essential to have your car inspected by a certified, independent mechanic, because unless you really know these complicated systems, you won’t be able to know whether or not the car is in good shape. It only usually costs about $100, and that will be the best $100 you’ve ever spent.”

If you do not already have a mechanic that you trust, there are services available to find one. Car Talk maintains a database of more than 16,000 mechanics. The database is searchable by ZIP Code, as well as by specific type of mechanic, such as one who specializes in Audis or Toyotas. Having your vehicle inspected by an independent mechanic will allow you to gain invaluable information on how the car was maintained, how it was driven, and whether or not it was involved in any major accidents. It can also reveal whether or not there are parts that might need to be replaced in the near future, such as worn out brakes or shocks.

“These inspections don’t just provide essential information, they’re also a bargaining chip,” said Gillis. “Just because an inspection reveals problems, doesn’t mean don’t buy the car. Say it turns out the car you want has worn out brakes, you can tell the dealer ‘hey, either replace the brakes, or knock $1000 off the price.”

 

Reach Contributor Sam Osborn here.