Beginners Guide to Understanding CARFAX (What Dealers Know)
Top Five Ways to Avoid Buying a Lemon (Carfax Edition)
Buying a used vehicle can feel overwhelming—especially if you can’t see it in person. One of the best tools available to protect yourself is a Carfax report. When used correctly, it tells the full story of a vehicle’s past and helps you avoid costly mistakes.
Here are the top five ways to avoid buying a lemon using Carfax.
1. Always Check Accident History
Accidents aren’t always deal-breakers, but they need to be understood. Look at:
Whether the vehicle was in an accident
The severity of the damage
Whether repairs were completed through insurance
If you see estimates without insurance claims, ask questions.
2. Review Ownership History Carefully
One-owner vehicles often come with better service habits, while multiple owners can introduce uncertainty. Frequent ownership changes may be a red flag, especially if service records are inconsistent.
3. Analyze Service Records (and Gaps)
Consistent service history shows care and responsibility. Keep in mind:
Not all repair shops report to Carfax
Missing oil change records should be questioned
High-mileage vehicles with strong service history can still be excellent buys
Think in terms of patterns, not perfection.
4. Verify Odometer Readings
Carfax helps identify mileage discrepancies that may indicate rollback or reporting errors. Compare dates, mileage, and service intervals to make sure everything lines up logically.
5. Confirm Registration, Branding, and Liens
This step is critical—especially for private sales.
Lien present? You don’t fully own the vehicle
Branding matters: Normal is ideal; salvage, rebuilt, or non-repairable come with risks
Out-of-province vehicles may require expensive inspections
Always do a Canada-wide lien search when buying privately.
Final Thoughts
A Carfax report should be read like a story. The cover page gives you a summary, but the real value comes from understanding how the vehicle lived its life—and whether that story makes sense.
If you’re unsure how to interpret a Carfax, a reputable dealership should be willing to walk you through it line by line.
Transcript:
What’s up guys, my name is Cole Johnson. For those of you that don’t know me, I’m the founder of AutoNation Canada. We’re a dealership just west of Edmonton in Acheson, Alberta.
Today we’re going to go through the Carfax edition of the top five ways to avoid buying a lemon. Make sure you stay tuned to the end of the video because I’m going to throw in a nice freebie for you—a true market appraisal tool. It gives you real numbers on what a vehicle is worth and spits out a value instantly. All you need is the year, make, model, mileage, and your postal code, or simply the VIN, mileage, and postal code.
Today we’re going to focus on the Carfax. I think Carfax is the most important thing when you’re buying a vehicle and you can’t physically be with it. It’s the first form of due diligence you should do. I like to think of a Carfax as a novel—it tells a story about the vehicle. When you read between the lines, you can learn a lot.
The first thing to look at is accident history. Sometimes people over-interpret it and sometimes they under-interpret it, but either way, having that information allows you to make an informed decision. Accident history is extremely important.
The second thing is ownership details. Sometimes you’ll see one-owner vehicles, and sometimes multiple owners, especially with used vehicles. This is critical. One owner may have been very diligent with service, while multiple owners may not have been. That can be a red flag.
Next is service history. When it’s listed, it’s great. However, not all shops report to Carfax, especially smaller owner-operated facilities in smaller Alberta towns. So sometimes service history won’t show up, but when it does, it gives you a lot to work with.
Odometer history is another key piece. Fraud and theft still happen, and while some things get missed, Carfax does a good job collecting data. There are ways to spot discrepancies or potential rollbacks that you can follow up on.
The last—and arguably most important—section is registration and lien information. A lien means there is money owing on the vehicle, usually from financing or sometimes repairs. Dealerships typically do this due diligence for you, but if you’re buying privately, you must check this yourself. If you buy a vehicle with a lien, you do not fully own it. This is extremely important to understand before handing over your hard-earned money.
Now let’s jump into an example Carfax.
The first page is the cover page, which includes a glossary and a quick overview of the vehicle. The first thing you want to look at is the report date. You want to make sure the report is recent so you’re not missing important information.
This example is a 2020 Chevy Silverado 3500 High Country. Sometimes trims are listed and sometimes they aren’t, especially on trucks, so verify the year and make. You can also see details like body style, engine type, and fuel type.
Next is the VIN. Save it so you can compare it to the vehicle in person. Then look at the odometer to confirm mileage disclosure.
The glossary highlights accident history, registration, service history, U.S. history, open recalls, stolen status, and import information. Lien information is also displayed prominently. This vehicle shows no lien records in Alberta, but I always recommend a Canada-wide lien search, especially if buying privately.
Accident history is next. This vehicle has no accidents. When reviewing accidents, I ask three questions: Was there an accident? What kind of accident was it? And was it repaired through insurance? If there’s an estimate but no insurance claim, that’s something to question.
Registration history also includes branding. Normal branding is good. Non-repairable means it’s parts only. Salvage means it was written off and needs inspection. Rebuilt means it passed inspection after being salvage, but banks and lenders treat these vehicles differently. Stolen status is self-explanatory but critical to confirm.
Service records show where the vehicle was serviced and how consistently. In this case, there are some missing oil change records, which is something I’d ask about, but overall the history looks good—especially at higher mileage, which is encouraging for a diesel.
You’ll want to match dates, mileage, and locations to make sure the story lines up. Think of the Carfax as the life story of the vehicle.
Next are recalls. Open recalls are important because they’re handled by the manufacturer, but you need to know whether they’ve been completed. Some manufacturers don’t always report recalls openly, so it’s a good idea to confirm directly with a dealer using the VIN.
The stolen section confirms whether the vehicle is actively stolen, which is obviously something you never want to see.
The detailed history section helps you understand ownership changes and odometer progression. In this example, it appears the vehicle has had consistent ownership from 2022 onward, which lines up with improved service consistency. That gives me confidence in how the vehicle was cared for.
That’s how I interpret a Carfax. The biggest takeaway is to think of it as a story. The glossary gives you a quick snapshot, but the real value comes from understanding where the vehicle’s been, how it was maintained, and what questions you should ask.
If you’re not comfortable doing this yourself, we’re always happy to walk through a Carfax in-house with you. It’s the first thing we do when helping a customer decide if a vehicle is a good fit.
Carfax also has a solid FAQ section on their website, and we’ll link that below.
As promised, we also have that free valuation tool from CarGurus. It gives you real market data and helps determine what a vehicle is worth. It may be sunset in the future, so I recommend checking it out ASAP. Dealers pay hundreds or even thousands per month for similar tools, so this one offers huge value.
I’ll drop the link below. Let me know what you think, and if you want to see more videos like this, like, comment, and subscribe. Thanks for watching.