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    by: Gary Hoffman | AOL Autos
     

    The situation comes up again and again. Customers come into a dealership to buy a new car with high hopes of getting a great price for their meticulously maintained trade-in. The interior is immaculate, the exterior basically looks brand-new, and they have a file folder full of maintenance records under their arm.

    But after spending a few minutes with a salesperson armed with a vehicle history report, they are crestfallen. Whether minor or serious, any accidents listed in the report could easily end up costing them a few hundred -- or even a few thousand -- dollars on the deal. They are pitted against the very tool that they may have employed as used-car buyers in the past.

    Dealerships say they rely on vehicle histories from firms like CARFAX and AutoCheck to protect their used-car inventories as well as their future customers. But when accidents show up in the histories, critics say, those records become the perfect tool to dampen expectations about a trade-in's value -- justifiably or not. The seller ends up feeling as though a black mark has shown up on a credit report.

    “It’s very common in the industry to use every possible instrument to get the price down,” said Tim Blake, a Miami attorney specializing in consumer and car dealership issues.

    It’s also part of the drill to point out every dent or scratch on the trade-in vehicle, he said. And if a vehicle history provides documentation, so much the better.

    While vehicle history reports are marketed heavily to consumers, the concept originated as an aid to dealerships. CARFAX, the pioneer, was founded in the early 1980s, and only began providing vehicle information to consumers in the 1990s. Dealerships are a major source of business for AutoCheck, another provider of vehicle histories, as well as CARFAX.

    Jeffrey Bennett, a professor of automotive marketing at Northwood University in Midland, Mich., says that’s just natural: dealers need to protect their customers from lemons and clunkers. But Blake argues that dealerships mostly value vehicle history reports "as a weapon. Sales people like to wave them around."

    In the hand-to-hand combat on the dealership floor, it’s data versus data. Customers today are armed with incentive and pricing information when they walk into a showroom. The history reports, retrieved from databases with a vehicle’s vehicle identification number, offer dealerships an opportunity to fight back. Given their razor-thin margins today, they may see that as a necessity.

    Dealers have to protect themselves, too, Bennett said. If a dealer accepts a defective car in trade, it’s going to be the dealer who is liable, not the person who traded in the vehicle.

    When Bennett was a Toyota dealer, he caught several brazen customers trying to buy a new car without admitting that their trade-ins had been in extremely serious accidents. In these cases, it turned out that the cars had salvage titles. A salvage title indicates that the car has suffered damage equivalent to 70 percent of its value. They would have been nearly a total loss to his dealership.

    “We couldn’t sell a car with a salvage title,” he said.

    Minor Accidents Can Mean Big Problems

    An accident or two on a vehicle history report might not be an indication that a car has major problems. But perception may be more important than reality. Amanda Levin of Park Ridge, Ill., found this out when she began negotiating a trade-in price for her meticulously maintained 2005 Toyota Matrix with about 87,000 miles on it. Its book value was about $6,000.

    She told her salesman about her two minor fender benders. She also mentioned the time the front bumper came loose in deep snow. Although minor, the three incidents were reported to her insurance company because she had a low deductible and could get the costs reimbursed. But that was more than enough to get them into the vehicle’s history.

    If the Matrix were taken in trade, the salesman told her the dealership might be forced to sell the car wholesale or even scrap it, Levin recalls. The fact that her Matrix might be sold for parts bothered her more than anything.

    “It was my first new car,” she said. “After taking such good care of it, I wanted it to go to a good home,” not wind up in a salvage yard, she said. After some more conversation, she accepted $5,700 as the value.

    Bennett says it wasn’t likely that the dealer would have scrapped Levin’s Matrix under those circumstances. Blake sees even the suggestion as a negotiating ploy.

    In any case, dealerships don’t really need vehicle histories to evaluate cars, Blake says. “Their appraisers can walk around the car, and not even open a door or the hood, and tell you everything about a car,” he said.

    "They can tell when a door doesn’t have a nice solid line,” he said. "They can tell when a door has been repainted. The can tell when the rivets on VIN number on dashboard has been pulled and there is a fake VIN number on the car. They can tell it all."

    But Bennett says they do need the information. And their appetite for it is nothing new -- it’s simply gone high-tech. Before vehicle histories were available over the Internet, dealers would readily factor information about accidents into their decisions if they could uncover any.

    Accidents simply create uncertainty about a vehicle’s mechanical condition, he said. “It’s just the way things are,” he said. “The perception is that a car that has been damaged is worth less than a car that hasn’t -- regardless of the level of the damage."

    Bennett offers this example: First of all, assume you have a choice of a blue 2007 Dodge Caravan or a red 2007 Dodge Caravan with the same mileage. Then assume the blue one has been in a “superficial” accident -- one in which the airbags did not deploy and the structure was not damaged.

    “On the other van, let’s say that there has been no damage whatsoever,” Bennett said. “No matter how we look at this, the blue van is not going to be worth as much as the red one because it has been repaired."

    Before vehicle histories were marketed to consumers, Bennett recalls, a friend of his had to have his car repainted after a contaminant ruined its paint surface outside a factory. “In reality, the car had no real damage,” he said. “But the fact that a car has been repainted at all will lower the value of the vehicle,” he said.

    At a dealer-only auto auction in Flint, Mich., each week, Bennett regularly sees buyers from dealerships painstakingly measuring the thickness of the exterior sheet metal. They want to know if the vehicle has been repainted -- an indication that it may have suffered major damage at some point.

    If the exterior was in fact repainted, "the guy might still decide to buy it and assume the damage was minor, but it won’t bring in as much as it would have otherwise."

    The lesson is clear: In an automotive industry awash in data, it may take more than just oil changes every 3,000 miles to maintain your trade-in’s value. It may take a perfect accident record as well.

    To get a free CARFAX record check on any vehicle, click here.

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    1 - 20 of 138 Comments
    Impluse310 Mar 25, 2011 4:20 PM
    BY THE WAY TRADE IN VALUES LIKE KELLY BLUE BOOK AND ETC DEALERS ONLY USE GALVES THIS IS THERE BIBLE COMES OUT EVERY WEEK WONT TRUE TRADE IN VALUE USE KELLY BLUE BOOK GO TO COND. FAIR TAKE OFF 3K TO 4K IF YOUR TRADE IS MINT AND NOT OVER 12,OOO A YEAR THATS YOUR IN VALUE GALVES USED BY DEALERS @ AUTION
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    Impluse310 Mar 25, 2011 4:06 PM
    THATS VERY FUNNY, A DEALER IN NJ SELLING 2004 MERCEDES BENZ E320 WITH 62K ON IT CAR FAX REPORT STATED NO DAMAGE I DONT OWN A PAINT METER BUT IAM NOT BLIND, 2 DOOR PANLES HAD RIPPLES THE FRONT BUMBER HAD BEEN REPAINTED THERE WAS OVERSPRAY NEAR THE HEAD LIGHTS, OPEN THE HOOD THE PAINT WAS COMEING OFF THE RUBBER CARFAXS ARE ******** !
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    Jstafrnd03 Mar 15, 2011 5:13 PM
    what happened to so called responsible reporting. Either you want to dealer to report damage or you dont..... got to always find a way to slam the dealer. The folks you are slamming are the same ones that you ask to sponsor your kids little league team!! And you have the nerve to talk about a car dealers ethics???
    Report This
    sureshkumaritc Mar 10, 2011 4:54 AM
    good
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    JohnMA7980 Mar 03, 2011 8:49 AM
    I bought a Hyudi telling the sailes man that I did not want to go over $250.00 a month after day's of haggeling not quite understanding what was happening when I finally traded in my 207 HYUNI i wound up with a payment of 321.00 a month. I am a senior retired living on Social Security and feel that I was taken advantage of they never even went over the bill with me. It wasnent till I got home that I relized what my payment was I was lead to believe it would be no more than $250..00 a month. I really think that these dearships are crocks I will never ever go back to that dealership again.
    Report This
    RPow4 Mar 02, 2011 10:38 AM
    To Mr. "mjvillao" Let's not also forget, we (the U.S.A.) taught the Japanese how to build cars. This help mostly came from G.M. The U.S. would not let the Japanese build war equipment after the war, we helped them build autos.
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    Dodie1990 Feb 13, 2011 8:59 PM
    First of all. most trades are free to the dealer. Working with a margin and list price any car over about 6 yrs old you might as well set on fire as give it to the dealer. The real money is made on the free trade not the sale of the new unit. It is true the dealer makes your old car go away and you get to drive away in a new car, but you are paying a terrible price. No matter how smart you think you are , you will never beat the guy who sells cars every day by buying one every year or two. That is why the dealers have all that money. These type articles just help them out. by making people think they can outsmart the dealer. Good Luck
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    LGian59 Feb 11, 2011 7:43 AM
    why has leasing a car more pricy especially a cadillac , it better to buy a year old car.
    Report This
    Exit2sandy Jan 12, 2011 11:01 AM
    2010 Buick LaCross with 4,000 miles, was caught in a hail storm, insurance paid to replace hood, and roof and trunk, but CarMax claims that dropped the price of car to $18,000! Paid $43,000 and owe $32,000! Very not fair!!!
    Report This
    HighDesertFord Jan 12, 2011 3:21 AM
    WTF???? Wow other peoples kids!
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    welchclock Dec 11, 2010 1:05 AM
    Heres a joke, was going down a list of good deal pickups under 15,000 . Showed a good deal chevy selling for 14,700 . It was 2008 with 49,000 miles and new it was 17k something. So thats a industry good deal. Well cut my nuts off and call me Gertrude. Poor SOB would be lucky if they offered him 8k on a trade in. Hell a New one lost 5k when he drove it off the lot. And they want you to pay WHAT????
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    theehaus Nov 27, 2010 1:35 PM
    I work in the car industry and a lot of what determines a cars value is crap. First problem I have is this: Your car because it was in an accident is worth less. This is a good way to crap on a consumer. Sure if there are obvious defects in the car I can understand it but if the repair guy put the car back to factory specs why is the car worth less? It is not fair for the consumer to lose value of their car buy paying to fix it. I also have a big problem with reconstructed titles. Suppose your car has $8000 in damage but your uncle fixes cars and you can fix all the damage for $2500 then tell me why if your $7000 car can be fixed for $2500 it is now totlaled? If you can prove your car can be fixed for under retail your car should not be totaled. Cars under $3000 with reconstructed titles should be the same or at most slightly less valueable than normal. $3000 in damage could mean pulling a hood, fender and bumber from another car at pick n pull and bolting it on. When buying cars in this price range should be judged on reliability not previous history. just becuase a car has been in an accident does not mean it is worth nothing. My biggest problem with the car industry is stress on mileage. Our consumers have been so brainwashed that cars should only have 100k miles on them to be good that no one wants to buy cars with 200k on them. This has pushed dealers and curb stoners to roll back mileage. Even though this is highly illegal it is done a lot. This should be blamed on the car manufacturers. If a dash is pulled it should set off a light just like the airbag does in which is difficult to turn off. If consumers knew how many miles half these cars had they would be less likely to be worried about mileage.
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    cherylsplace1227 Sep 27, 2010 6:23 PM
    mohegan438....the salesman was lieing about the Carfax report! Carfax would not benefit from that lie, only the salesman. I had a beautiful older red collectible car with extremely low mileage, I had bought new. It was stored winters and never had so much as a door ding. The saleman tried to tell me the same thing about my car. Said it had printed up as having extensive body work. He had also "accidentally" left (hid) my keys in the manager's office. Since he had picked my keys up off the desk, it was illegal for him to do that. I told him the car was bought new (he was red faced)and that he had 15 seconds to get my keys. The key game is one where if you don't buy the car, a manager will bring the keys out to you and ask you to explain why not! (Don't hand your keys to the salesman unless you know him...lay them on your side of the desk.) Or take an extra single key and leave it behind. That is part of a game plan at some dealerships. They warn the salesman the customer must put the keys into his hands, he can't pick them up off a desk, so ********* legal to hold them. When you do find a salesman who gives you a good honest price, good service and treats you with respect....go back to the same salesman. He wants your repeat business just as bad as you want a good price. He won't play games to waste his time or yours. The salesman I deal with, sells me a car at a good deal and I'm out within an hour. He always has someone waiting for him to sell or deliver their new car. In the future if a salesman tells you that much of a lie, just get up and walk out. If he is not telling the truth about your car, how can you trust anything he tells you? There are some very trustworthy sales people out there. I've found these type get right to the deal and don't bother offering tours of the dealership, doesn't go get you cokes or coffee, or accidentally leaving the keys to the car you have appraised in the managers office, and does not use the prase, "And what would it take to put you in this car today?" That's when you know your salesman is forced to use those sickening sales techniques and a dealership you don't want to trust.
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    florida1busman Sep 24, 2010 9:23 AM
    Maybe it's just human nature to dread waking into a car dealer's showroom? Nothing more irritating than to hear the question "What do I have to do to get you into this car today?" I love having a new car, but the buying is never a good experience! You want to take a shower after you leave the salesman's desk!
    Report This
    copi2000 Aug 12, 2010 6:34 PM
    PERFORMANCE GMC TRUCKS IN NEW WATERFORD, OH, PRICES THEIR VEHICLES WAY ABOVE N.A.D.A. AND KBB....THE SALES GUY SAYS HE DONT CARE WHAT N.A.D.A. SAYS!!! 2002 4 DOOR XLT CREWCAB MANUAL TRANS. 7.3 LTR 4X4 APPRAISED FOR 17000K THEY TRIED TO GET RID OF IT FOR 23000K THEN KNOCKED IT DOWN TO 20990...IF ANYONE TRIES TO BUY FROM THEM PAY SUPER CLOSE ATTENTION! THEY WILL GET YOU SOOOO UPSIDE DOWN YOU WONT EVER GET OUT FROM UNDER THE VEHICLE!
    Report This
    gokivi Jul 10, 2010 12:25 AM
    RETN71 - Sorry to hear you have no ethics and worked for a place you shouldn't have. how far did they hold the gun to your head? Hope your not as dumb as you sound.
    Report This
    gokivi Jul 10, 2010 12:20 AM
    The title of this article proves the ignorance abound.. and proves the author has no clue about the car business. It's utterly disrespectful to the 1000's of extremely honest, very hard working, family oriented good natured salespeople who work their asses off to make a $100 commission when you buy your $30,000 car at invoice. Here's a tip people: Don't trade your car in, please sell it on your own. It might take you 6 months to a year like it will at a dealership to sell your heap, but you don't want to be nickel and dimed right? Do you think someone will pay you retail for your car? Dream on....
    Report This
    retn71 Jul 02, 2010 8:46 PM
    Car dealerships, whether new or used, are in the same category as lawyers and dentists. We hate them. I work for a new car dealership and if I told half of what I knew was happening I'd go to jail. So glad I am not management. I am a "foot soldier"; I do what I am told and therefore I stay employed.
    Report This
    fordf350va Jun 21, 2010 1:50 PM
    You can go on and on about this and that, but the bottom line is this: find what suits you best. My wife and I currently have a 2005 Nissan Xterra. We purchased it in 2006. It had 15k miles on it and came with a new vehicle warranty (I DO NOT PURCHASE BRAND NEW VEHICLES). The vehicle has served us well, and when we wear it out we may get another. It is built in Tennessee. It has over 100k miles on it, and still runs very well. I anticipate 200k miles before we get rid of it. With respect to such things as CARFAX, we all have to be able to understand vehicles. I learned well from two uncle's, one who was a VW dealer. When I examine a vehicle for purchase I use a proven technique of inspection which requires that I get dirty inspecting the following areas of vehicle service (Lubrication, suspension, drive system, and exhaust system check). Any vehicle I had I drove over 100k miles. That was the result of an intensive preventative maintenance program. Purchase of a vehicle is not for the amateur. There are things you have to KNOW, automatically. If not you will not be successful. Norman Prevatte Fredericksburg, VA
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    mohegan438 Jun 10, 2010 4:03 PM
    I just purchased a 2010 sante fe. I traded in my 2003 sante fe bought at the same dealer ship.Carfax said that there was 3 previous owners and that the car was not properly maintained.I was the only owner and the vehicle was serviced at the same dealership.DONT TRUST CARFAX !!!!Thedealer could not explain the carfax error I got my trade in price after he checked his records on my vehicle.
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