CarFax Reports, Worth Their Weight?
CarFax reports have become the hoy grail in determining historical records and crash events that have occurred during your car’s life. The value of your ride after an accident can be dramatically altered through disclosure of the event on CarFax.
I routinely pull a CarFax report on every vehicle I present to a client, and usually avoid a car with an accident. Why? Fewer issues, although in some cases I have considered the accident report because it’s very minor and I have disclosed to the buyer.
Something I always recommend is that you keep any and all service and maintenance records that can be shown to a prospective buyer when you plan to sell. Keep the MSRP sticker, too!! It shows all of the options listed when your car was new, and it helps bring value when you want to sell.
Back to CarFax. They are only as good as the information they can gather. They get their data from bodyshops, insurance providers, state institutions, and others who will provide them with information. The point I am trying to make is that they are only as good as the information they can gather. I own a car that was involved in a minor accident that was never reported to CarFax. While they are a good resource, don’t treat their information as the Holy Grail; have an inspection done to be sure.
Buy or Lease?
I am often asked if leasing is a good way to own a new vehicle. Here are some factors to consider, because it can be a great way to drive a really nice car or truck for a lower payment than a purchase would require. I am a proponent of leasing because I have done it multiple times and offers some advantages (for me) over a purchase.
First, lets define leasing and some terms: 1. An auto lease defines very specific terms that are required by the lessor (the bank or institution providing the lease) to you (the lessee) that must be adhered to during the lease period. 2. The Capitalized Cost is the selling price of the vehicle that sets part of the lease payment. This does not have to be disclosed, but EVERY lessee should know what that amount is. It does not have to be disclosed on the lease document, but you should know what that figure is. 3. Residual Value: this is the expected value the vehicle should be worth at the end of the lease. It is calculated by taking a percentage of the MSRP (window sticker price) that is set by the lessor. This is the depreciation that the vehicle will experience over the life of the lease. this is also a figure that should be disclosed, as it makes up the bulk of the monthly payment. 4. Money factor: Instead of calling it an interest rate, lease companies call it a money factor. This makes up the other part of the monthly payment. It can be converted to an interest rate by multiplying by a factor of 144. 5. Mileage Limitation: all leases indicate the the total mileage the vehicle should have at the end of the lease. Most standard leases today limit mileage to 10,000 miles per year, some 12,000. The leases can buy additional mileage if there is an expectation of driving more than the standard amount. Most companies use a figure of .25 per mile as a standard amount. This is added to the lease payment. Lessees do not have to include this calculation in the lease, but will be charged for the difference at the end of the lease.
So, who should lease a vehicle instead of buying one? The following guidelines can help make the decision, as a lease payment is, in most cases, lower than a purchase payment, but there are other factors to consider: 1. Do you expect to drive more than 12,000-15,000 miles per year? Leasing may not make sense unless you plan to keep the car after the lease ends. 2. Is it important to have a factory warranty during the ownership period? Leases are typically 3 or 4 years in length, which corresponds to most factory warranty terms. 3. Do you typically trade change or change vehicles every 2,3 or 4 years? If so, leasing might be a better way to go, as it gives you specific options at the end of the lease, and the value is a given with a lease. 4. If you use your vehicle for business, leasing offers some tax advantages such as writing off the entire payment if used totally for business purposes. 5. Leasing give you specific options at the end of the lease. You can purchase the vehicle for the residual value, return the car to the lease company, or sell it and pay off the residual amount. 6. If the vehicle is involved in an accident during the time you have the vehicle and it results in a CarFax report that devalues the vehicle, the lessor is on the hook for that. If that happens during a purchase, you will take that hit when you sell or trade the vehicle. In a lease, you take no hit. Currently 30% of consumers are leasing, up from 20% a few years ago. Why? There are a number of factors: the average vehicle price approaches $35,000 today, making leasing more attractive with lower payments. More knowledge about leasing. In the “old days” the selling (capitalized cost) was not disclosed, and many lessees paid way too much for their vehicles. Lease payments are based on the same factors that finance purchases are based on: selling price and interest rate. Leases incorporate the depreciation factor, which i think, gives the buyer more information to base their decision on.
Leasing doesn’t work for everyone, but it has some advantages that make it a good alternative to financing. When you consider your next ride have a lease payment figured as a comparison to financing.
Accurate or not?
Is the trip computer in your driver accurate? I admit it, I am one of those guys who runs the gas gauge down to where the warning light comes on, which drives my wife crazy! She doesn’t let it go below the 1/4 mark before filling up, while I will rely on the “miles to empty” to let me know just how far I can go before I need fuel! Are we polar opposites or what?!? Car & Driver wanted to know, so they compared the trip computer mpg to real world economy when filling up and found that on average, trip computers are off by an average of 5%. Really? Maybe we should stop calling them “computers”...5% doesn’t sound like much, but shouldn’t it be right on? (Ok, I don’t really care that much), but if you are an accuracy freak, C&D has a way to adjust your individual computer to record accurate readings in this article, which can be found in the September issue. Be sure to bone up on your math skills!
I am usually in complete agreement with the Porsche Club of America (PCA) and their value assessment of vintage Porsche’s.
This article identifies 4 water cooled and 1 (lonely) air cooled Porsche that will increase in value dramatically in the next few years, in their opinion. I disagree with some of their assessments!!
Here is my take:
The 1983 911SC is a no brainer, as is the 2001-03 996 Turbo. Both maintain the classic 911 look, and in the case of the SC, it was the first real update of the 911 to meet U.S. emission and safety standards without sacrificing performance and quality. It was perhaps the best 911 at the time, and the Carrera that followed it was only better in that it offered more trim choices.
Everyone thought the 924 was a crappy car, and they were right, but the first 944’s were a huge upgrade from that–better performance, better look, and better build finish. The first 944’s carried over the 924 interior, which was not great to look at. If the 924 is your gig, look for the 924S which had the 2.5L engine from the 944.
A better investment would be to find a 944S or 944 Turbo. They are much better performing cars, fewer in numbers and are not much more expensive than the 944.
Anyway, here is the link to the article from PCA: https://www.pca.org/news/2017-07-11/five-porsches-buy-right-now
This is a category that most, if not all, manufacturers are all over these days, as it gives them the opportunity to sell lease returns and low mileage trade-ins with a factory extension of the warranty that the car came with new.
These vehicles are put through an extensive checklist of items to be sure they meet the standards set by the manufacturer so they can be sold with the "CPO" designation.
There is a cost associated with that, hence a CPO vehicle will command an $800-1200 price premium over a non-CPO certified vehicle.
Is it worth the additional $$?? In a nutshell, yes, it is worth the addlitional premium, as the warranty does guarantee that any part that becomes defective during the CPO period, it will be fixed with no charge to the consumer.
Since it has become so successful, independent dealers have created similar products that perform the same way as the manufacturer CPO program operates.
some things to watch out for----
1. Independent dealers CPO programs are administered by insurance companies. Check to be sure they are reliable.
2. These have a mileage and time restriction, and most of the time a deductible that has to be met to initiate repairs. Be sure you are aware of these restrictions!
3. It makes sense to have these aftermarket warranties be within a nationwide network, as opposed to the dealer itself providing the coverage.
Even when a dealer offers a CPO like product on the car you are purchasing, it can be a valuable add-on to the price of the vehicle.
After living here for 13+ years and experiencing all kinds of weather, I finally was caught in a hailstorm that weather people love to talk about on TV. We have had our roof damaged by hail twice, but nothing like what I was caught in this spring. I have always been fortunate enough to be far away from the big hailstones that do damage to your car. Well, my luck ran out and my Turbo S was hammered to the point when I took it to the body shop for repairs, they determined that the damage was excessive and the car was not worth fixing. That was also a first for me!Hopefully you will never have to experience a similar situation, but I thought some tips on how the process works will help you maximize the value your insurance company pays you. First, an insurance adjuster looks over the car and determines a preliminary value. In my case they felt it could be fixed, but I was told that the repair costs were approaching the "totalled" amount. Once I took it to the collision shop of my choice and they looked at it more closely, the repairs exceeded the value of the car, and the ins. company contacted me to discuss what my options were. Basically, there are two options your adjuster will give you: keep it or sell it to the insurance company. If you want to keep it, you will be given replacement value less the salvage value, which is the amount the insurer feels they can recover by selling to a wrecking yard or auction.Why keep it? Only if you think you can sell it for more than the salvage value, or have difficulty replacing the car right away should you consider this option. Why? The vehicle will now have a "Branded" title, meaning that it cannot be financed by a mainstream lender, and the value when you go to sell it will be way less. The second option is to negotiate a settlement with your insurance adjuster on a fair replacement value for your car. I use the word "negotiate" because there is always some wiggle room when determining the value of an automobile!! In my case, I was able to increase the amount I received by providing additional information on my car that the adjuster had not taken into consideration. What to do: obtain the Kelly Blue Book (KBB) retail value, and the NADA retail book values for you car. Be certain that you are using the VIN# off your car, as that identifies it more specifically than by just using the model name. Both of these are available online, or I can get them for you. This was important to my case, as the adjuster was using wrong model for my car, which made a difference of nearly $1000 in determining it's value. Had I accepted the adjuster's initial figures, it would have been costly, for sure!!Second, collect comparable values of similar models that are selling on cars.com, Autotrader, ebay, etc. Try to find 3-5 that have similar mileage and equipment to your car. It's not important that they be local, as car buying and selling has become a nationwide endeavor, so location does not matter. You will be paid the fair replacement value that is agreed upon, plus sales tax (if applicable), AND if you had a rental car rider on your policy, any amount that was not spent on the rental. Again, in my case, I had a maximum of $500, and ended up spending about $350, so I will receive a check for the difference from the insurance company! It could have been more, but I did not hear from the body shop for nearly 10 days while I had the rental. Partly my fault, as I waited a week to contact them, and it took another 3 days for me to learn about the totalled condition. BE PERSISTENT early on if you think your car will be totalled. So, in the end, I am going to lose my bought-new 15 year old, somewhat unique, thought I would keep forever, VW Beetle Turbo S! Great memories, but it was not worth keeping, and I am looking forward to finding the next great, fun, ride!!