Auto Finance Pitfalls and Solutions

PITFALL #1:
Consumers generally spend far less time looking into financing than they do finding the right car at the right price. Overlooking their loan is big mistake, because financing terms play an important role in determining the overall value of the purchase.
SOLUTION #1:
Adopt the mindset that you need to take the time to shop around for your vehicle loan the same way you do for the make, model, features and price. Auto loans may not be as exciting as a sleek new car – but then, saving money never goes out of style.

PITFALL #2:
Many consumers don't know what kind of shape their credit rating is in when they apply for a loan. Credit score plays an important role in determining what kind of interest rate you will receive, so it's critical to make sure your credit report is in the best shape possible before applying for a loan.
SOLUTION #2:
Order a copy of your credit report…look for items that may stand in the way of you getting a good rate…and correct any issues or errors promptly. For example, are all of your lines of credit in good standing? Are there any signs of identity theft? The credit bureaus will tell you how to correct errors when they send you the report.

* Experian: 888-397-3742, www.experian.com
* Equifax: 800-685-1111, www.equifax.com
* TransUnion: 800-916-8800, www.transunion.com


PITFALL #3:
Many consumers are tempted to overspend once they get to the dealership.
SOLUTION #3:
Set a sensible price range for your vehicle purchase. Experts suggest that monthly car payments and related expenses should not exceed about 15 percent of your monthly net income. Bring a printout of your budget to the dealership as a reminder.

PITFALL #4:
Most consumers arrive at the dealership without having researched the current interest rates being offered in the marketplace, so they have no idea if they're being offered a competitive rate.
SOLUTION #4:
Use the Internet as a research tool to comparison shop rates. Visit Web sites of online lenders such as www.capitaloneautofinance.com, which offers competitive low interest rates. Also check out sites like www.bankrate.com for national averages, and the site of your own financial institution. However, even knowing rates doesn't guarantee consumers will receive what's posted. The consumer's credit history and dealer mark-ups are just a few of the many factors that can make a significant difference. The only sure way to know what you'll be paying for a loan is to obtain financing before visiting a dealership.

PITFALL #5:
By the time they get to the finance department, many consumers are mentally worn out – and don't read the contract in its entirety before signing on the dotted line. As a result, they may be agreeing to buy things they didn't plan on (such as an extended warranty, rust proofing, etc.).
SOLUTION #5:
Before you sign any papers or hand over any money, be sure to read every page of the paperwork to make sure you're getting the exact deal you want.

PITFALL #6:
The consumer feels rushed, pressured and confused by the dealership's staff, and is having second thoughts about completing the deal – but does so anyway.
SOLUTION #6:
Consumers who feel out of their comfort zone should walk away. The buyer, not the seller, should be the one in control of the process. Remember, the federal "cooling off" law does not apply to cars or houses (and it only applies when the salesman visits your home, not when you visit his store).

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Who is PRBC?

PRBC (Payment Reporting Builds Credit) is a national consumer reporting agency and credit bureau. PRBC collects, stores, scores and reports bill payment data for "permissible purposes" under the Fair Credit Reporting Act. It is the first credit bureau to give consumers and small businesses a way to build a credit file to demonstrate creditworthiness without the need to go into debt.
How long have you been in business? Do you have any privacy or reliability seals?

PRBC was incorporated in March 2002 and has become a trusted resource for individuals, small businesses, and lenders. PRBC is a member of the Better Business Bureau (BBB) in Annapolis, Maryland. The prbc.com website has received a BBB Online Reliability Seal and a TRUSTe Privacy Seal.

How is PRBC different from the "big three" credit bureaus - Equifax, Experian, and TransUnion?

PRBC is the only credit bureau that allows people to enroll themselves. It's also the only bureau that lets individuals demonstrate their fiscal responsibility with information that is not reported to the "big three," such as on-time rental payments and non-debt bill payments. PRBC produces a PRBC Reportsm and Bill Payment Scoresm (BPSsm) that can be used to supplement your "big three" credit bureau reports and scores (if you have one of them). A PRBC Report and BPS can show that you have paid your bills on time for up to the past three years. PRBC maintains your bill payment history in your file for seven years but does not share your file without your permission.

Unlike other credit bureaus, PRBC does not charge you a fee to view your PRBC information at any time, nor does PRBC sell your private personal information to solicitors, telemarketers, or direct mail firms.

Don't the "Big Three" bureaus collect all of my bill payments already?

No. Equifax, Experian, and TransUnion do not automatically collect your on-time payments for many of the bills you pay each month. Payments for the following bills will only be reported to the big bureaus if your payments are late or in default:
Rent
Cable
Phone
Daycare
Insurance
Electric
Natural Gas Cell Phone


With PRBC, you can document your positive payment history in a PRBC Credit File by reporting your payments for these types of bills.

Does PRBC report payments to the "Big Three" bureaus, or offer a credit repair service?

No. PRBC does not report to other bureaus and we do not offer a credit repair service or "fix" information contained in your credit files at other bureaus. PRBC is a credit bureau, similar to the "Big Three" bureaus. However, credit reports and scores from the "Big Three" bureaus do not include on-time commonly recurring bill payments such as rent, insurance, cable, phone, remittances, day care, child support, and utilities. PRBC is the only credit bureau that enables individuals to build a credit file using self-reported payment data that isn't found in traditional credit reports.

Who gets to see my PRBC Credit File?

You maintain full control over who may see your PRBC Credit File. It will never be shared with any other company without your permission. PRBC has a strict Privacy Policy and will never sell your information to solicitors or marketing firms.

Do I have to pay to create an account?

No. It's free to register and enter your account information. When you report your own payments on rental, utility, or other payment accounts, PRBC may need to verify these before thay can be included in your Credit File. PRBC charges fees for these verifications (see questions about verifications below).

If you choose to use one of our online bill pay partners and have your payments reported to PRBC automatically as you pay your bills, you will not have to pay to have those payments verified.

How often can I view my PRBC Credit File? Do I have to pay to see it?

You can view your PRBC Credit File as often as you'd like, free of charge.

What does PRBC charge me, my landlord, or my bill payment service provider to report? How does PRBC make money?

PRBC does not charge you a fee to set up a Consumer File, enter payment or account data, or to view your information at any time. PRBC does not charge landlords, billers, or lenders to report on your behalf. PRBC sells credit reports (like the Big Three) to lenders upon your consent, when you apply for housing, credit, insurance, and employment. PRBC also charges fees if you choose to have self-reported payment history verified to be included in your Credit File.


How it Works

How can I get my historical rental and other bill payments verified?

To have your historical information verified, you must first register and create your account. Once you've registered and entered your account information, make sure all of your billing and payment account details are accurate. You can then just click on "Order a Verification" under the "User Services" tab while logged in to your account.
Please note: You must have a minimum of six (6) months of payment history to order a verification.
How can I use online bill pay to build my PRBC Credit File automatically?

When you sign up with one of PRBC's partner bill pay services, your payments will be reported to PRBC automatically as you pay your bills online. Each payment you make adds to your PRBC Credit File. By paying bills on time, you'll build a positive Credit File with PRBC that you can use to qualify for a mortgage and better rates.

I already pay my bills through my bank online for free, so why should I pay to use yours?
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If your bank's bill pay service is not currently reporting your payment information to PRBC, then many of the bills you pay online are not helping you build credit. Using one of PRBC's partner bill pay services ensures your PRBC Credit File grows automatically as you pay your bills.

Building a positive PRBC Credit File and Bill Payment Score demonstrates your creditworthiness and fiscal responsibility. A PRBC Report can save you thousands of dollars on a mortgage or auto loan and hundreds of dollars on mortgage insurance.
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Do I have to order a verification AND sign up for an online bill pay service?

No. You can choose one or the other. If you want to create a PRBC Credit File and PRBC Bill Payment Score (BPS) using payments you've made in the past, then you should order a verification. If you want to start reporting your payments to PRBC going forward, sign up for a PRBC partner online bill pay service.

If you've already ordered a verification but would like to keep your Credit File current, using one of PRBC's partner online bill pay services is a simple and cost effective way to do so.
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Security


What steps does PRBC take to protect my personal information from theft or other unauthorized use?

PRBC is a "consumer reporting agency" (CRA) as defined by the Fair Credit Reporting Act (FCRA), and therefore must comply with federal, as well as state laws that make sure your non-public personal information is properly protected.

PRBC has made significant investments to protect your personal information from theft and unauthorized use. Security of your personal information is the single most important consideration in the design of the PRBC service. PRBC has deployed the latest security technology and stores your personal information in ultra-secure data centers.

The PRBC Team pledges to go above and beyond the letter and the sprit of the FCRA at every opportunity possible to protect your personal information from theft and unauthorized use, as if it were our own.

Will my information be shared with other companies or sold to mailing lists?

PRBC feels strongly about protecting your privacy and will never give or sell your information to mailing lists or marketing firms. If you decide to report your own payment information that you would like to be included in a PRBC Report to share with lenders, this data will need to be verified. PRBC conducts payment verifications by obtaining your permission to contact your biller (utility, phone company, landlord, etc.). All payment verifications are conducted confidentially by FCRA-certified members of the NCRA (National Credit Reporting Association). Our verification partners are prohibited from using your personally identifiable information for any other purpose including their own marketing. Is this site encrypted? Does it have an https page?

PRBC encrypts all data transmissions using secure socket layer (SSL) technology. We will only collect personal information to the extent deemed reasonably necessary to serve our legitimate business purposes, and we will maintain advanced safeguards to ensure the security, integrity and privacy of your personal information.

PRBC is a licensee of the TRUSTe Privacy Program. TRUSTe is an independent, non-profit organization whose mission is to build users' trust and confidence in the Internet by promoting the use of fair information practices. To learn more about PRBC's privacy and security policies, view our privacy policy.


Your PRBC Account


How can I tell if I am enrolled? Then what do I do?

If you can use your User Name and Password to login, you are enrolled. Then you can add payment accounts (such as your rent, mortgage, utilities, etc.) to your PRBC profile by submitting a few basic account details.

To verify historical payments that you have reported yourself, make sure you have made payments for a minimum of six (6) months. Ensure all of your billing and payment account details are accurate, and order a verification while logged in to your PRBC account. For more information regarding how to order a verification, please go to http://prbc.com/consumers/how/verification.php.

How do I change my address or personal information?

You may change or update your personal information at any time by logging in to your user account at https://prbc.com/secure/login.php. Once you log in, choose "Consumer Profile," change your information, then click "Update."

top What happens if I forget my username and/or password?

Please visit the Login Page and use the 'Forgot Username' or 'Forgot Password' feature. If all else fails, register as a new user, and reestablish access to your PRBC Bill Payment History.


Applying for a Mortgage
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I am getting ready to apply for a mortgage. How will my PRBC Credit File help me?

Depending on the rest of your credit history, an electronic record of 12 or more consecutive on-time monthly payments will help you qualify for a mortgage and/or obtain a lower interest rate. The longer you can show you've paid bills on time, the better. An electronic record of 36 consecutive (3 years) on-time monthly rent or mortgage payments generally helps the most.

If you have no credit history but meet other guidelines, you can qualify for an FHA-insured mortgage with 12 or more consecutive on-time housing payments (rent or mortgage), plus three other payment accounts or trade-lines such as phone, utilities, and cable.


Verification Questions


What is the cost for a consumer verification?

PRBC can verify payment history for up to 36 months, and you must have a minimum of six (6) months of payment history to order the verification. PRBC charges $20 to verify a rental history and $15 to verify other types of payment accounts. For example, the cost for verifying rent and 3 additional payment accounts (i.e., electric, phone, cable) is $65.

Where do I send my documentation for verification?
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Once you have completed account and payment details and ordered a verification, send your documentation to the fax number or mail address contained in your "Verification Order Receipt."

How long does it take once I order the verification?

Once all documents have been faxed to the verification processing center, the typical turnaround time is two to three business days

Financial Education Resources
Education, Inclusion, and Achievement Matter

PRBC is the first credit bureau to put consumer and small business owner education first.

PRBC is also the first credit bureau to enable PRBC Data Network users to gain equal access to prime mortgages, auto loans, other financial products, money saving, and asset building services.

Just as on-time mortgage payments are automatically counted in favor of consumers when applying for credit, the PRBC Data Network makes it possible for lenders to count on-time rental, utility, and other bill payments too.

PRBC leaves no consumer or business owner behind. What you do know financially can help you achieve your goals. To learn more, visit these highly reputable and trusted resources:


FDIC Money Smart curriculum helps individuals build financial knowledge, develop financial confidence, and use banking services effectively.

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Fannie Mae Foundation Knowing and Understanding Your Credit is a guide to learning about what credit is and why having good credit is so important. The guide also provides useful information about credit reports and credit scoring, and advice on how to improve your credit.



Freddie Mac's Credit Smart® curriculum is a multilingual financial education curriculum and consumer outreach initiative. It is designed to help consumers build and maintain better credit, make sound financial decisions, and understand the steps to successful long-term homeownership. CreditSmart increases consumers' financial understanding by teaching them life-long money management skills and showing them how to avoid costly mistakes. CreditSmart is available in English, Spanish, Chinese, Korean, and Vietnamese.



Operation HOPE Banking on Our Future Across America, the vision of Operation HOPE founder John Bryant, will teach more than 18,000 youth in twelve major cities, with the help of 1,000 banker-teachers, the basics of a checking account, a savings account and the importance of credit and investment in their young lives.



The NeighborWorks Financial Fitness program is designed to educate you about the pitfalls of non-traditional banking outlets and how to avoid them. It can also help you learn the financial management and planning skills you need to make the most of your income, savings and assets.



The National Urban League is the nation's oldest and largest community- based movement devoted to empowering African Americans to enter the economic and social mainstream, to secure economic self-reliance, parity, power and civil rights.



Coalition for Consumer Bankruptcy Debtor Education's Making Sense of Cents course is designed to help consumer debtors who have sought bankruptcy relief to improve their financial literacy skills; topics covered include credit reporting, credit scoring, common consumer scams and credit math. This three hour course is offered in New York City.



National Council of La Raza Economic Mobility is a program designed to help Hispanic families move up the economic ladder and climb out of poverty. The goal of the program is to aid Latinos in enhancing their national impact on economic and employment policy issues such as savings, asset-building, tax, and workforce policies that invest in building the skills of today's workforce.



The National Community Reinvestment Coalition Financial Literacy Campaign was designed to help bring low-to-moderate income communities, individuals, small business and minorities into the financial mainstream by helping them develop an understanding of banking practices, savings, and the importance of good credit

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Getting the Best Deal: Financing & Insurance

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People are often surprised to hear that a dealership's financing and insurance (F&I) department, or "business office," is a profit center. Reality check No. 2: Everything dealerships sell you represents a profit opportunity. With few exceptions, the dealer is a middleman. In the case of the new car itself, you can't eliminate the middleman. Most state franchise laws prohibit manufacturers from selling directly. But you can eliminate the dealer with regard to financing and insurance if you determine that it's in your best interest.



With the widespread availability of invoice pricing, it's harder for dealers to squeeze margin out of the new-car transaction. Much of the profit has shifted to the "back end," which includes the F&I department. The F&I department is also where many buyers let their guard down and squander any good negotiating they've done for the vehicle's purchase price.



You have various options for financing a vehicle, including credit unions, banks and dealerships. In some cases, the loan you'd get from a dealer comes from the same bank you could go to yourself. Dealers play the part of loan agent in trying to get you the best rate, but they can and do add percentage points to the rates they obtain from lenders. In many cases, they split the additional profit margin with the lender, so everyone wins — except you. Though its ethics are in question and consumers have sued dealers over it, this practice isn't currently illegal. Some day regulations such as the Truth in Leasing Act may be enacted to require disclosure of loan rates.



However, since many captive financing companies offer discounted loan rates, it's possible to get the best deal by financing at the dealership. Shopping during an incentives period increases your chances for these savings.



In addition to loans and leases, dealerships often offer health, disability and other insurance plans. Some buyers appreciate the opportunity to make all their deals under one roof, but you should look into third-party sources and shop around before choosing an insurance plan.

Back-End Products and Services
The F&I manager is also responsible for selling additional products and services, which are a significant source of dealer profit. They include:
service contracts: Often referred to as extended warranties, these plans are meant to take over when the manufacturer's warranty runs out and/or cover repairs not accounted for in the manufacturer's warranty. Consider your needs carefully before purchasing a service contract for a new car. While the cost of new cars has risen, so has their reliability. The period between purchase and major scheduled service is longer than ever. And experts say the parts of a car that are most likely to break after the factory warranty expires are typically not covered by third-party service contracts, though there are exceptions, such as four-wheel-drive systems and turbochargers. If you consider a service contract, bear these issues in mind:



Some contracts have deductibles, and some do not. Amounts vary, and you may have to pay a deductible for each claim or even individually for unrelated repairs in the same claim. Get the details.
Don't assume your contract will transfer to another dealer if you move. And if it can be transferred, is there a fee?
The contract also may not transfer to another owner. An extended warranty is a nice selling point — but not if it's tied to you rather than the vehicle. Check for owner transfer fees.
Sometimes one of a car's parts or systems will be responsible for damage to another part of the car. The best example of this is a timing belt. In certain engine designs, when this part breaks it causes catastrophic (and very expensive) valve damage. A timing belt may cost $20. Which will the service plan cover? Some service contracts stipulate that the insured cannot collect for damage to a part covered by the plan if it was caused by an uncovered part, negligence or some other hard-to-define condition.
If you're financing for a longer term, say five or even six years, check the mileage limitations of the extended warranty. It's possible you could surpass the mileage limit, thereby voiding the warranty, before the financing period ends.


Service contracts represent a significant profit source for dealers, so expect the hard sell. The price and all the terms above are negotiable, and again, you can comparison shop the service plan at multiple dealerships even if you're not buying the car there.






Vehicle Service
Vehicle repair is big business. Thanks to the complexity of modern vehicles, dealer service departments are guaranteed a steady flow of business that might otherwise go to independent repair shops.



In terms of the dealership's bottom line, the service department can contribute a healthy percentage of the profit. In 2007, the National Automobile Dealers Association reported that service and parts departments made up 46 percent of total dealership operating profits. This further illustrates how the profit has skewed away from the vehicle sale and toward the products and services that follow. It also explains why dealers are sometimes willing to sell at extremely thin profit margins.



If you come in with an immaculate trade-in and meticulous maintenance and repair records, then the dealer may intuit that you're good for a few years of regular service and give you a good deal on the purchase price itself.

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Consider the dealer’s reputation when buying .

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Used cars are sold through a variety of outlets: franchise and
independent dealers, rental car companies, leasing companies,
and used car superstores. You can even buy a used car on the
Internet. Ask friends, relatives and co-workers for recommendations.
You may want to call your local consumer protection
agency, state Attorney General (AG), and the Better Business
Bureau (BBB) to find out if any unresolved complaints are on file
about a particular dealer.
Some dealers are attracting customers with “no-haggle
prices,” “factory certified” used cars, and better warranties.
Consider the dealer’s reputation when you evaluate these ads.
Dealers are not required by law to give used car buyers a
three-day right to cancel. The right to return the car in a few days
for a refund exists only if the dealer grants this privilege to
buyers. Dealers may describe the right to cancel as a “coolingoff”
period, a money-back guarantee, or a “no questions asked”
return policy. Before you purchase from a dealer, ask about the
dealer’s return policy, get it in writing and read it carefully.
The Federal Trade Commission’s (FTC) Used Car Rule
requires dealers to post a Buyers Guide in every used car they
offer for sale. This includes light-duty vans, light-duty trucks,
demonstrators, and program cars. Demonstrators are new cars
that have not been owned, leased, or used as rentals, but have
been driven by dealer staff. Program cars are low-mileage,
current-model-year vehicles returned from short-term leases.
The Federal Trade Commission’s Used Car Rule requires dealers
to post a Buyers Guide in every used car they offer.

Buyers Guides do not have to be posted on motorcycles
and most recreational vehicles. Anyone who sells less than six
cars a year doesn’t have to post a Buyers Guide.
The Buyers Guide must tell you:
whether the vehicle is being sold “as is” or with a warranty;
what percentage of the repair costs a dealer will pay
under the warranty;
that spoken promises are difficult to enforce;
to get all promises in writing;
to keep the Buyers Guide for reference after the sale;
the major mechanical and electrical systems on the car,
including some of the major problems you should look out
for; and to ask to have the car inspected by an independent mechanic
before you buy.
When you buy a used car from a dealer, get the original
Buyers Guide that was posted in the vehicle, or a copy. The Guide
must reflect any negotiated changes in warranty coverage. It also
becomes part of your sales contract and overrides any contrary
provisions. For example, if the Buyers Guide says the car comes
with a warranty and the contract says the car is sold “as is,” the
dealer must give you the warranty described in the Guide.
As Is — No Warranty
When the dealer offers a vehicle “as is,” the box next to the
“As Is — No Warranty” disclosure on the Buyers Guide must be
checked. If the box is checked but the dealer promises to repair
the vehicle or cancel the sale if you’re not satisfied, make sure the
promise is written on the Buyers Guide. Otherwise, you may have
a hard time getting the dealer to make good on his word. Some
states, including Connecticut, Kansas, Maine, Maryland, Massachusetts,
Minnesota, Mississippi, New Jersey, New York, Rhode
Island, Vermont, West Virginia and the District of Columbia,
don’t allow “as is” sales for many used vehicles.
Three states — Louisiana, New Hampshire, and Washington
— require different disclosures than those on the Buyers Guide.
If the dealer fails to provide proper state disclosures, the sale is
not “as is.” To find out what disclosures are required for “as is”
sales in your state, contact your state Attorney General.
“As-Is — No Warranty” means that the dealer assumes no responsibility to fix anything
that goes wrong after the sale.

ABC 123
STATE
Implied Warranties
State laws hold dealers responsible if cars they sell don’t meet
reasonable quality standards. These obligations are called implied
warranties — unspoken, unwritten promises from the seller to the
buyer. However, dealers in most states can use the words “as is”
or “with all faults” in a written notice to buyers to eliminate
implied warranties. There is no specified time period for implied
warranties.
Warranty of Merchantability
The most common type of implied warranty is the warranty of
merchantability: The seller promises that the product offered for
sale will do what it’s supposed to. That a car will run is an
example of a warranty of merchantability. This promise applies
to the basic functions of a car. It does not cover everything that
could go wrong.
Breakdowns and other problems after the sale don’t prove the
seller breached the warranty of merchantability. A breach occurs
only if the buyer can prove that a defect existed at the time of
sale. A problem that occurs after the sale may be the result of a
defect that existed at the time of sale or not. As a result, a
dealer’s liability is judged case-by-case.
Warranty of Fitness for a Particular Purpose
A warranty of fitness for a particular purpose applies when you
buy a vehicle based on the dealer’s advice that it is suitable for a
particular use. For example, a dealer who suggests you buy a
specific vehicle for hauling a trailer in effect is promising that the
vehicle will be suitable for that purpose.
If you have a written warranty that doesn’t cover your problems,
you still may have coverage through implied warranties.
That’s because when a dealer sells a vehicle with a written warranty
or service contract, implied warranties are included automatically.
The dealer can’t delete this protection. Any limit on an
implied warranty’s time must be included on the written warranty.
In states that don’t allow “as is” sales, an “Implied Warranties
Only” disclosure is printed on the Buyers Guide in place of
the “As Is” disclosure. The box beside this disclosure will be
checked if the dealer decides to sell the car with no written
warranty.

In states that do allow “as is” sales, the “Implied Warranties
Only” disclosure should appear on the Buyers Guide if the dealer
decides to sell a vehicle with implied warranties and no written
warranty. A copy of the Buyers Guide with the “Implied Warranties
Only” disclosure is on page 13.
Dealers who offer a written warranty must complete the
warranty section of the Buyers Guide. Because terms and conditions
vary, it may be useful to compare and negotiate coverage.
Dealers may offer a full or limited warranty on all or some of
a vehicle’s systems or components. Most used car warranties are
limited and their coverage varies. A full warranty includes the
following terms and conditions:
Anyone who owns the vehicle during the warranty period is
entitled to warranty service.
Warranty service will be provided free of charge, including
such costs as removing and reinstalling a covered system.
You have the choice of a replacement or a full refund if, after
a reasonable number of tries, the dealer cannot repair the
vehicle or a covered system.
You only have to tell the dealer that warranty service is
needed in order to get it, unless the dealer can prove that it is
reasonable to require you to do more.
Implied warranties have no time limits.
If any of these statements don’t apply, the warranty is limited.
A full or limited warranty doesn’t have to cover the entire
vehicle. The dealer may specify that only certain systems are
covered. Some parts or systems may be covered by a full warranty;
others by a limited warranty.
The dealer must check the appropriate box on the Buyers Guide.

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Free Vehicle History Reports

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There is much confusion about the availability of "free vehicle history reports" or "free Carfax reports." None of the vehicle history reporting services in any of the countries listed above offer the service for free. Several of the services, most notably those in the United Kingdom and the United States, sell reports to dealers and then encourage the dealers to display the reports on their Internet sites. These reports are paid for by the dealer and then offered for free to potential buyers of the vehicle.

Research used car pricing

When researching used car prices, you'll typically find three kinds of prices:

* Dealer or Retail Price is the price you should expect to pay if buying from a licensed new-car or used-car dealer — retail price. Dealer prices will always be the highest listed because of the dealership’s need to make a profit.
* Dealer Trade-in Price or wholesale price is the price you should expect to receive from a dealer if you trade in a car. This is also the price that a dealer will typically pay for a car at a dealer wholesale auction.
* Private-Party Price is the price you should expect to pay if you were buying from an individual. A private-party seller is hoping to get more money than they would with a trade-in to a dealer. A private-party buyer is hoping to pay less than the dealer retail price.

The growth of the Internet has fueled the availability of information on the prices of used cars. Whereas this information was once only available in trade publications that dealers had access to, there are now numerous sources for used car pricing. Multiple sources of used car pricing means that the prices you get from different sources often won't agree with each other. This is a result of each pricing guide receiving data from different sources and making different judgments about that data. The best way to determine a price is to cross-check prices with multiple sources and add a dose of your own good judgment to arrive at your price.

Pricing of used cars can be affected by geography; generally a convertible has a much higher demand in Florida than in New Hampshire. Similarly, pickups are often more in demand in rural than urban settings. Condition – Is the car in excellent, good or fair condition – has a major impact on pricing. Condition is based on appearances, vehicle history, mechanical condition and mileage. There is much subjectivity in how the condition of a car is evaluated so always take your time and use common sense when car shopping.

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Vehicle History Report: Your Key to a Good Used Car

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Vehicle History Report: Your Key to a Good Used Car


You're shopping for a used car when you think you've hit pay dirt. It's a '95 import with low miles. It drives great, and the price is right. When you question the owner about the car's history, he says he bought it from a used car lot only two years ago.

You're about to write a check when you have a troubling thought: This deal seems too good to be true. Maybe something's wrong with the car that they are keeping hidden. Who owned the car before? Is there any damage or problems you should know about?

At one time there was no way to check a vehicle's history. Buyers could only go on the evidence in front of them, basing their decision on the mechanical condition of the car. But computer technology has made it possible to use the Vehicle Identification Number (VIN) to reveal a car's possibly checkered past.

Vehicle history reports can be ordered from a number of Internet companies. The first company to offer this service is Carfax, which, as the name suggests, began faxing used car reports as early as 1986. Now, the Fairfax, Virginia-based company accesses 4,400 different information sources and a database of more than 2 billion records to compile reports that are e-mailed almost instantaneously to customers. Users can also get a free Carfax Safety & Reliability Report that includes key make and model level information when ordering the unlimited Carfax report option.

"We literally have every car on the road in our database back to 1981," said Carfax Vice President of Marketing Scott Fredericks. He notes that 1981 was when the U.S. government accepted the VIN as a standard tracking code for a vehicle's history. "Think of the Carfax as the DNA of the car — the Carfax report never forgets."

Vehicle History Reports — A Growing Field

While Carfax seems to be the leader in this new field, there are many other companies vying for the consumer's business. Many of these companies draw on similar sources for their information and present the data in a compiled report at competitive prices. Carfax charges $29.99 for a single report, $34.99 for ten reports, and $39.99 for an unlimited number of reports for one month.

Consumer Guide has taken the process one step further. Vehicle history information is drawn from the monster database of Experian (with 1.7 billion records) and coupled with Consumer Guide's repair information.

"What we do that is unique is marry the Consumer Guide data to [vehicle history reports] on the fly," said Grant Whitmore, general manager. "We also track trouble spots for year, make and model for that vehicle." While the information doesn't pertain to that specific vehicle, it gives a buyer a general picture of the car's reliability and the replacement cost of parts, should something go wrong.

"If you are selling your car, you can buy the report and show it to the potential buyer," suggested Consumer Guide Product Manager Robin Kowalski. "This will show [consumers] there isn't some sort of wreck that they weren't aware of."

Consumer Guide launched its Vehicle History Reports February 22, 2001. Whitmore declined to give specifics about the number of reports that have been ordered but said, "It's been extremely popular."

Odometer Rollbacks

If you order a report from Carfax, your report is broken into nine categories: report summary, vehicle specifications, accident check, mileage accuracy check, lemon check, ownership check, recall check, warranty check and vehicle history details. The different pieces of the report are summarized in a table that may flag problems. Details are listed later in the report.

Most importantly, Carfax provides an independent check of a vehicle's history. While the odometer of a used car might show that it has only 55,000 miles, the Carfax might indicate that the odometer readings at key events in the car's history — emissions tests or title changes — don't match up.

For example, the report might show that a certain vehicle was smog-checked in December 1999 at 55,000 miles. But then, when a change of title was issued two months later, the odometer reading was recorded as being 45,000 miles. Obviously, there was some kind of foul play here.

The number of miles a car is driven directly affects the price of the car. Therefore, a seller has a strong incentive to rollback the odometer. Each excess mile a car is driven — over the expected yearly average of from 12,000 to 15,000 — reduces its value. Therefore, turning back an odometer 10,000 miles can increase the sale price of the car by $600.

In another situation, a person might be ready to return a lease car and be faced with paying $2,000 in mileage penalties to the dealer. A quick trip to a "spinner" — someone who turns back odometers — will save them a lot of money. In this way, dealers are defrauded, and so is the next person who buys the car.

"Folks think because [the odometer] is digital, it is harder to rollback," Fredericks said. "But it's not. Anyone with a laptop [and the right software] can plug into the car's computer under the hood and do it." He added that some estimates have shown that 40 percent of lease cars have been involved in some type of scam.

Title Washing & Curb Stoning

Another scam detected by Carfax is called title washing. This occurs when "state X might not recognize titles from state Y," Fredericks said. "People who are unscrupulous will take bad cars and move them into that state. This happens every day."

But a Carfax report tracks the car as it crosses state lines. If a car has been "branded" in another state — with a salvage title, for example — this will be revealed on the report. Salvage titles are assigned to cars that have been considered a total loss by insurance companies. However, the car might still run and be drivable. Still, having a salvage title significantly reduces the car's value.

Curb stoning occurs when a dealer has an inferior or damaged car he can't sell on his lot. He gives the car to a salesperson to sell through the classifieds, as if it were a private party sale. However, a Carfax report will show that the title recently changed hands and may reveal that it is a lemon or an otherwise branded car. Fredericks recommends being suspicious if the seller's name is different from the name on the title.

Edmunds Test-Drives Carfax

While we were writing this article, Carfax gave us an account to run a number of vehicle history reports. In many cases, reports were run on cars that were known to have salvage or lemon titles. Carfax reports caught those problems and flagged the pertinent information.

As a test case, we entered a VIN number for a '98 Corvette we knew had been branded as a lemon. Sure enough, the Carfax report clearly flagged the problem by stating: "LEMON LAW VEHICLE Repurchased by manufacturer."

In other cases, we ran reports on cars we knew little about. In one instance, the report noted a "potential odometer rollback." Looking closely at the vehicle's file, however, it appeared the source of the rollback alert was probably a clerical error at a smog inspection station. Everything else about the car's history lined up.

"One of our fundamental tenets is 'Data authenticates data,'" Fredericks said. "This means that the more data sources we collect, the more verification we receive about the vehicle's history — including odometer rollbacks."

In another case, an Edmunds employee's husband was considering buying a '95 Acura. He test-drove the car and felt it was in good mechanical condition. However, after running a Carfax report, it was discovered that the car was given a salvage title in 1996 and, several years later, a junk title (a junk vehicle is one that was reported to the DMV by an individual or a dismantler as having been dismantled). When the seller was confronted with this information, they said, "Oh yeah, I thought I told you about that."

In yet another case, an Edmunds editor ran the VIN number of a car she had owned several years ago. It was the only report that was returned listing an accident. It read, "Accident reported involving left side impact with another motor vehicle." Fredericks explained that Carfax receives information from law enforcement sources reporting accidents. If a car is totaled in an accident, a salvage title is assigned. But prospective buyers will still want to know about minor accidents. In this way, they can find out if the damage was properly repaired.

Consumer Guide's Whitmore said their reports also list accident reports, usually if they were serious enough to cause damage to the car's frame.

The Dealer's Angle

Car dealers have also found the Carfax reports valuable. In many cases, a dealership will run a report on a car that a customer brings in as a trade-in. The Carfax report allows them to protect themselves from accepting a branded car, one that would be difficult to resell. Additionally, dealers can generate Carfax reports on the vehicles they are trying to sell. In this way, shoppers don't have to take their word for the vehicle's history — the information is being provided by an independent source.

What Does the Future Hold?

With the increased speed of data communications, the amount of information about vehicles will increase in the coming years. Both Carfax and Consumer Guide hope to tap into service and repair records in the near future. Then a consumer can see if a car was maintained according to the manufacturer's requirements before purchasing it.

"We are working on [getting service records] now," Fredericks said. "That's our next big frontier."

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Repossessing Cars Leads to a Hit Reality Show

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"I treat people with respect. I don't cross the line until they cross the line. And you can't show any fear. The second you show fear, then you're the prey, and they're the predator. And you don't want that." — Lou Pizzaro, repo man

I've been shot at, slapped, spit on. I've been in plenty of fights. I've been pepper-sprayed. Once I was run over by a guy trying to escape with his car. I mean, you name it and I've been through it. But it's all part of my job: I'm a repo man. And if you get behind in your car payments, I'm the guy the bank is gonna send to come get your car.

It's really kind of crazy what people do for their cars. I guess it's a psychological thing: You want to keep up with the Joneses and impress the ladies. People buy all kinds of fancy speakers and rims for their car — I've seen cars with 15-, 20,000-dollar sound systems on them — then they don't make payments on the car itself!

How I Got Into Repo-ing
I'm 41, I had seven brothers and sisters, and our mom was the only parent around. We lived in the projects in the Bronx, and I was fighting all the time. We even fought for government cheese, if you can believe that. Eventually we moved to the San Fernando Valley (in Southern California).

My first job was with Continental Airlines. Then I joined the Marines, which was the best thing I've done in my life. After that, I was down in Florida and I ran into a gentleman in a gas station who told me he was a repo man. He made it sound like stealing cars, but he had a license and the police were on our side. I said, "Man, I'd love to do repos, too." He offered me a job on the spot. He picked me up exactly at midnight, and I went repossessing with him. After we finished, he told me, "Wow, you're a natural at this. Weren't you scared?"

A lot of the skills I use as a repo man are things I picked up growing up the way I did. You have to be very savvy, very street smart. I also learned a lot from when I worked for the airlines. When I have to back up with a car I'm towing, or fit through a tight space, I think back to when I was pulling $100 million 747s.

How the Repo Process Works
Banks, credit agencies, finance companies or even private parties will send repo notices to us, via fax or e-mail. We go pick up the car and take it to our shop. Whatever you put on the car legally belongs to whomever owns the car, so when we repossess a car with fancy rims and speakers, we keep everything on it. We also do a report on the owner's personal property that they may have left in the car. They have 60 days to pick up that property. In many cases, we'll just give the personal property back, especially if it's a baby seat or medicine people may need to survive.

After the car is in our control, the registered owner (RO) has 15 days to make good on the account and redeem their car, though banks sometimes give a 25-day extension. If the ROs can't make the payments, we deliver it to an auction. The bank sells it for as much as they can get, and holds the ROs liable for whatever is left on the money they owe that isn't covered by the auction.

We're also hired to do "skip tracing" — that's actually finding the car. When people get behind in the payments, they move the car around, try to hide it, so we have to find it before we can grab it. We get the information from the credit application and that has the owner's address and phone numbers. There's a 50-50 chance the car will be at the owner's address. If not, we call around to all the numbers associated with that car; usually it turns out that the owner has moved, but sometimes the car has been in an accident.

If you get behind in your payments, don't try to hide the car. The smartest thing you can do is call the loan company. They know these are hard times, and they will usually work with you to try to keep you in the car. If they send the car for repossession, we'll find it and then you'll be out a whole lot more money. (For other tips on how to avoid repossession and what to do if your car is repossessed, please see "Stay One Step Ahead of the Repo Man.")

I like doing repos on the larger equipment: tractors, planes, commercial stuff. Recently, I picked up three hot air balloons. Repos of those things have gone up, just like everything else. The biggest thing I've ever repossessed was a 657E land mover, a giant piece of construction equipment with two engines. The most expensive thing I've taken in was a Citation, a $7 million jet. But I've repossessed anything you can think of. I've even done entire companies. You get a court order, show up at the company's office with the sheriff and then you take everything there. It's kind of sad.

I Treat All People With Respect
When I'm repossessing I always begin by treating people with respect. I don't cross the line until they cross the line. But when people start threatening me, I have to be firm. And you can't show any fear. Here in L.A. County, the second you show anybody fear, you're the prey, and they're the predator. And you don't want that. Without being disrespectful, you have to show them that you're a firm guy, you're going to hold your ground. Lots of times I say, "Hey, you should have been responsible and made your payments."

Some people don't see it that way. They see me as the enemy. But they're really their own worst enemy. All we're doing is providing a service for the bank. If there were no repo men, you wouldn't be able to afford the finance rates for a car — interest rates would be 40, 50 percent, and the economy would be way worse than it is, even now.

The Stories People Tell
Everyone has a story about why they shouldn't have their car repossessed. Some people are truthful, but I can see right through you if you're BS-ing me.

Once, I was picking up a car and the woman who owned it came out all upset. She started tearing up and told me she had to take her mother to the hospital since she had gangrene on her leg. I thought she was lying. But then the door opened, and her mom came out in shorts with a leg that looked terrible. Her story was true. I felt so bad! That assignment really stuck with me. Later, that woman got back to the finance company, and while they were happy to hear from her, they also stopped sending me work 'cause I did the humane thing. That's OK. It happens.

If I'm doing a repo on a woman's car, she can tell right away that I'm a gentleman. So she'll try to get away with pushing me or insulting me. My assistant Matt, he's a really big guy, and women will often try to provoke him, hoping he'll do something that they can sue him for. One woman called the police on us, and told them that Matt had tried to fondle her. But since we had the incident on tape, the police ended up charging her for filing a false report. When people are desperate, they do desperate things.

Operation Repo the TV Show
Even though I see people at their worst, I don't have a bad view of humankind. I believe everyone makes mistakes and everyone deserves a chance. Things happen, man. I've been there, too. I'm not gonna judge you, no way. I could be right underneath you tomorrow, and I'd have to work twice as hard to get out. That's how it's always been; when I'm slapped down, I come up with another idea and I just work at it. Like the way that my show, Operation Repo came about.

I got a call from Channel 52 (a Spanish language television station) and they wanted to do a story about a day in the life of a repo man. After it was on, people kept coming up to me and saying, "Hey, you're that repo guy." It got me thinking about the possibilities. So I got some guys from my church, and we shot a bunch of footage. And it led to Operation Repo on Tru TV.

I gotta tell you, my repossession days are numbered, because right now, I'm moving on to something else. My goal is to direct more movies. I directed my first feature film, Operation Repo: The Movie last year, and I'm working on another one.

I'm really jazzed that I have all these hit shows. But I also hope they help people see that repossession agents aren't the bad guys. We're just part of a system. The problem is, we're the last part in the process. In this economy, we're the guy who takes your car. But I always just have to tell people, "You gotta do your part. You gotta be responsible and make your payments." Then you're never gonna see us.

Posted with permission.

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