CARFAX provides clients with data about any car in their system.
The information can tell you if the car received any repairs or was in any accidents.
That information can help you determine whether the car is worth the value it’s listed at or if you can negotiate the price down.
However, some may wonder if the information CARFAX provides is actually reliable or factual.
With various institutions, like auto repair shops, insurance companies, and state agencies, that report to CARFAX, here are 10 reasons CARFAX is reliable.
Is CARFAX Reliable? (10 Reasons It Is)
1. Insurance Companies File Claims
One of the most important reasons CARFAX is reliable is that it takes reports from insurance companies.
Insurance companies benefit from reporting information to CARFAX.
When a client of theirs has an interest in buying a car, then they get a CARFAX report on it.
If past insurance companies submitted claims about the vehicle, then the client can see those reports.
The insurance company the client is using can also see those reports.
They can then develop a policy that fits the state of the car.
For example, if the report claims that the car is a lemon or underwent massive repairs, then the company knows it’s older and may need more repairs in the future.
Since it’s likely going to be in the shop more often, the insurance company is going to need to cover more repairs.
It’s more expensive for them, so they make the policy more expensive for the client.
Because insurance companies benefit from those reports, they’re more likely to submit factual reports.
As such, the information you see on CARFAX can sometimes be very accurate and reliable.
CARFAX is reliable because it gets its information from insurance companies.
2. Auto Auctions File Reports
Another institution that submits reports on cars is auto actions.
There are frequent auto auctions where people sell highly-prized cars, junker cars, and cars that just need a little bit of work.
Auto auctions are a great opportunity for car enthusiasts to add a car to their collection or to find their next project.
Others go to auto auctions with a desire to get a car for a cheap price.
When someone submits a car for auction, they have to also submit information about the car’s shape.
If there are any problems with the car, then they need to report it on the file.
This is because auto auctions want to inform bidders of any problems with the car.
The last the auction wants is to find itself responsible for selling a car that seemed healthy only to find that it doesn’t even start.
The bidder is going to be happy, and people might stop coming to the auction altogether.
As such, auto auctions try hard to get sellers to be factual and accurate in their reporting of their cars.
Some auctions will also have a mechanic on hand.
The mechanic will look over the car and note any major problems.
Because auctions move fast, the mechanic might miss the smaller problems, but anything big is sure to get noted.
This just further ensures that the seller is being factual in their reporting.
Auto auctions then turn that information over to CARFAX.
It helps other auto auctions, too, since they can just look up the VIN of the car and see any past reports or claims on it.
This further helps them provide a factual and accurate description of the car to bidders.
Since it helps them, they help CARFAX.
CARFAX is reliable because it gets its information from auto auctions.
3. Auto Repair Shops File Reports
Another source of information that reports to CARFAX is auto repair shops.
It’s worth noting that not every auto repair shop reports to CARFAX.
Local or “mom-and-pop” auto repair shops, for example, likely aren’t in the CARFAX network.
As such, it’s usually dealership auto repair shops and national chain auto repair shops that report to CARFAX.
That said, these sources of information are also accurate.
Auto repair shops are a major source of information for CARFAX.
Whenever a car comes in for a repair, they’re the ones handling it.
They’ll see everything from a minor repair to a major collision.
They’ll report the problem to CARFAX, then state whether the car was able to get a repair or not.
For example, if the car needs a repair that’s more expensive than the car, itself, then some owners may choose to forego the repair.
They might just drive it as it is or choose to scrap it.
Either way, the auto repair shop reports that information to CARFAX.
Reporting benefits auto repair shops because it helps repair shops in the future.
They can take a look at the past repair history of the car to understand what’s already happened to it.
They might find that a car needs the same frequent repair.
That might indicate that there’s a larger problem with the car.
Not only can that help make dealers aware of a potential need for a recall, but it also helps the owner of the car.
Since auto repair shops benefit from submitting information to CARFAX, they’re likely going to do it.
CARFAX is reliable because it gets its information from auto repair shops.
4. Rental Companies Provide Information
CARFAX is also reliable because it gets information from rental companies.
There are tons of different rental car companies in the country.
Most national rental car companies also choose to report or provide information to CARFAX.
If a renter totals a car or damages it, then they’ll inform CARFAX about the repair.
However, this isn’t always the case.
It all comes down to how they handle their repairs.
Some rental car companies will simply bring the broken car to a repair shop.
From there, the repair shop will submit a report to CARFAX.
Other rental car companies have their own mechanics.
These mechanics may or may not report to CARFAX.
That said, it is in a rental car company’s best interest to provide information.
They’re always buying new cars to rent out to their clients.
They’re taking a look at those CARFAX reports, too, to ensure they’re buying good cars.
The last thing a rental car company wants to do is spend a lot of money on a car that isn’t going to last very long.
They want to get the most out of that car.
An accurate report from CARFAX can help them avoid spending money on cars that aren’t worth it.
Since it helps them save money, rental car companies are more inclined to submit reliable information to CARFAX.
Because CARFAX gets information from rental car companies, they’re able to provide factual and reliable information to clients.
5. State Inspection Agencies Provide Information
State inspection agencies also give information to CARFAX.
There are several inspection points throughout a given state.
Most inspection agencies focus on semi-trucks or hauler truckers.
They ensure that the truck isn’t carrying too much weight for the stretch of highway ahead.
Others check them to ensure that they’re not carrying anything illegal.
Some states also concern themselves with customs.
If a car is coming from a different country, then they’ll need to inspect the car.
They’re looking for anything illegal, but they’ll also submit any reports about damages that they notice.
However, since state agencies are typically looking for contraband rather than problems, the information they provide to CARFAX may not be useful.
Most people may want to know if a car experienced flooding, for example, if it carried drugs in the trunk.
That said, because the report comes from the state, you can expect that it’s going to be pretty accurate and reliable.
The state gets into deep trouble if it submits false information about something.
To avoid that, they ensure that the information they provide to CARFAX is accurate.
CARFAX is reliable because it gets its information from state agencies.
6. Fire Departments File Claims
Fire departments also submit reports to CARFAX.
You’ll often hear about how law enforcement and fire departments are always swarmed with paperwork.
Part of that paperwork is reporting the damage done to a car as accurately as they can.
That report ends up going to several different institutions.
One of those institutions is CARFAX.
When a car catches on fire, the fire department will get dispatched to put it out.
They’ll then examine the car to determine the cause of the fire.
Even if the driver tells them what happened, they’re still obligated to inspect the car themselves.
They’ll then write down the cause and the spread of the damage.
They’ll indicate whether the car is repairable or if it’s totaled.
CARFAX will get that information and then have it available for its clients.
Anyone who wants to buy that car in the future will see the report from the fire department.
They’ll know that, at one point, the car was on fire.
That might help them determine whether the car is a good investment or not.
Since fire departments have to give accurate reports of fires, they’re able to send accurate information to CARFAX.
CARFAX is thus reliable because it gets reliable information from fire departments.
7. Law Enforcement File Claims
Besides fire departments, law enforcement is also responsible for filing reports about damaged vehicles.
Many law enforcement offices will submit that information to CARFAX as well.
Whenever an auto accident occurs, the police officer has to take an accurate and detailed report of the damage done to the car.
That information could be useful later if the accident moves to a trial of some sort.
It’s also useful for insurance companies.
Insurance companies will usually contact law enforcement to double-check that the information they received from their client is accurate.
Because of its importance, law enforcement tends to give pretty accurate information.
CARFAX gets a hold of that information and presents it to its clients.
People who use CARFAX can then see whether the car they want to buy has been in an accident before or not.
This is useful information since it can help them determine if the car is worth what it’s selling for.
For example, they might discover that the car received massive repairs following an accident.
That might prompt them to test drive the car.
During the test drive, they might find that the car doesn’t handle as well as they might like.
That can save them money in the long run by avoiding the purchase.
It all comes down to factual reporting by law enforcement.
CARFAX is reliable because it gets information from law enforcement.
8. Vehicle Manufacturers Provide Information
Vehicle manufacturers also provide information to CARFAX.
Manufacturers will make CARFAX aware of any defects in the car.
For example, if the manufacturers put out a recall for a car, then they’ll need to report that to CARFAX.
CARFAX will then make its users aware that specific cars were once recalled back to the manufacturer.
This is useful information since it helps protect buyers.
They might find that the car that they want to buy never went back to the manufacturer.
It could still suffer from the same serious problem that caused the recall in the first place.
To avoid lawsuits, vehicle manufacturers will do what they can to spread the word about potential problems with their cars.
One way they do that is by providing information to CARFAX.
CARFAX is reliable because it gets information from vehicle manufacturers.
9. Vehicle Owners Update Information
It isn’t just official institutions that update information on CARFAX either.
The actual owner of the vehicle can also update information on the car on CARFAX.
Of course, not every vehicle owner will do this.
Most who want to sell their car for as much money as possible will probably refrain from being accurate on CARFAX.
However, there are others who want to be accurate, too.
They may worry that the individual they sell the car to might turn around and sue them.
If they say something about the car and it doesn’t turn out to be that way, then there’s a possibility that they might face a lawsuit.
As such, some vehicle owners will actually submit accurate information to CARFAX whenever something happens to their car.
Others may only report major information.
For example, not everyone is going to submit when they had their oil changed or when they got their tires rotated.
Instead, they’ll report information following a crash or when their car received damage from the weather.
CARFAX is reliable because it allows vehicle owners to keep information about their cars updated.
10. Canadian Provincial Motor Vehicle Agencies Provide Information
A final reason CARFAX is reliable is that the Canadian Provincial Motor Vehicle agency also provides information to the company.
It’s common for dealers to sell used cars from Canada.
They can get away with some of the reporting since Canada has different rules about certain things when selling a car.
For example, they might reset the odometer to make it look as though the car doesn’t have as many miles on it.
The good thing is that several Canadian Provincial Motor Vehicle agencies report information to CARFAX.
These agencies are aware that a good number of their cars end up in the United States.
To ensure buyers have the most accurate information, they report the repairs and problems that those cars experienced while they were in use in Canada.
Because it’s easy to lose information when it crosses a border, using CARFAX is a great way to become more aware of any problems with a car that comes from Canada.
CARFAX offers detailed reports of repairs and other services done to a car.
It’s a reliable institution because it gets its information from several different sources.