CARFAX – A Bad Report Hurts You More ($) than You Know.
Be aware that Dealers use CARFAX Reports to benefit them, when you go to trade-in your car. If you’ve been in a minor accident, don’t be too quick to put in a claim to the insurance company. Call me first!
Here’s two recent examples on the Seller’s side:
1) A customer of mine who owns a Cadillac Escalade was lightly tapped by another driver and the tow hitch was scratched, which is a $75 item. The driver that hit him wanted to go through insurance, so it showed up on the Cadillac’s CARFAX when he went to trade it in. The dealer took $2,200 off the top, because it “was hit from behind” per the report. A clean CARFAX report is the key, even with a receipt for the $75 part. There are no details on the CARFAX report and no one to call at CARFAX to get the report clarified.
2) Another customer with a Toyota Highlander, that was damaged, had a repair quote for $4500. He was turning the lease in and he was going to submit a claim. He thought he would only have to pay a $500 deductible. I told him that by submitting a claim it would tag the car with a bad CARFAX rating.
Here’s the deal:
I figured out that the buyout was $18,900, (the car in perfect condition was worth $24,500) I got him a deal of $22,000 for the car.
The bottom line was:
1) He received $3,100 in equity,
2) He didn’t have to get the car fixed,
3) He didn’t have to pay the insurance deductible,
4) He didn’t claim it on his insurance and his premium was not effected!
TIP: Don’t go through your insurance for minor damage. You’re better off bringing a car to a dealership with a bumper hanging off than if you went through insurance, had it repaired but it has a bad CARFAX report.
TIP: On the buyers side, my advice is to go with a “certified” pre-owned car. Most dealers are not allowed to certify a car if there is a bad CARFAX Report attached to it.