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How to Read a Vehicle Condition Report

Vehicle condition report being completed

For independent used car dealers, vehicle condition reports can be a valuable tool. Vehicle condition reports offer a wealth of information about a vehicle’s current state, making them a key resource for independent dealers during the purchasing process.

When you’re evaluating a potential auction purchase, understanding what goes into a vehicle condition report is an effective way to ensure the vehicles you acquire don’t turn out to be a lemon. In this guide we’ll help you interpret these reports confidently and leverage their insights to your advantage.

What is a vehicle condition report?

A vehicle condition report provides a detailed breakdown of a vehicle’s state. Generated by a third-party professional inspector or appraiser, vehicle condition reports can serve as an unbiased assessment of the vehicle’s overall condition. Understanding the different components of a vehicle condition report is essential for independent dealers to make informed buying decisions.

For dealers, the content contained in a vehicle condition reports can provide multiple benefits, including:

  • Informed and transparent buying decisions
  • Reduction of risk
  • Better repair cost estimation 
  • Determining fair market value of vehicle
  • Peace of mind for online dealer auction purchases

What is included in a Vehicle Condition Report?

Vehicle condition reports typically cover key areas such as the exterior, interior, some mechanical components, and overall functionality of the vehicle. Though the layout may differ based on the source of inspection, they often include details regarding the vehicle’s:  

  • Make
  • Model
  • VIN
  • Mileage 
  • Paint condition
  • Any visible dents, scratches, or rust
  • Any visible rips, stains, or burn marks to the interior
  • Mechanical condition of engine, brakes, and transmission
  • Condition of electrical systems, such as lights, radio, and battery
  • Condition of tires, including age, wear, and type
  • Additional features, such as navigation or safety components

How do you describe car condition?

Have you ever found yourself asking, “What is considered fair condition for a vehicle? What is considered poor condition for a car?” Vehicle condition ratings, often presented as a numerical or alphabetical scale, provide an assessment of the vehicle’s condition. A prime example is the NAAA Vehicle Condition Grading Scale, which rates a vehicle’s condition from 0-5 based on the overall condition of the interior, exterior, mechanical systems, frame/underbody, and tires. 

As one might expect, the higher the number, the better the condition:

  • Grade 5Vehicle in excellent condition
  • Grade 4Vehicle is better than average
  • Grade 3Normal wear and tear
  • Grade 2 – Shows signs of excessive wear and tear
  • Grade 1Shows signs of severe abuse
  • Grade 0 – Vehicle is inoperative

Reading a Vehicle Condition Report

It’s important to note that any rating on a vehicle condition report is made of many parts, and each section in a vehicle condition report holds significant importance. By carefully examining each section, you can gain a more comprehensive understanding of the vehicle’s condition. This knowledge can help you make strategic buying decisions and avoid potential pitfalls.

To begin, start by reviewing the overall vehicle condition summary. This section provides a general assessment of the car’s condition, highlighting any major issues or concerns. Pay close attention to the rating or score given to the vehicle, as it indicates its overall condition relative to similar cars.

Next, you’ll want to jump into the specific areas such as the exterior, interior, and mechanical condition. The exterior section will outline any visible damages like dents, scratches, or rust. Look for signs of previous accidents or poor maintenance, as these can indicate potential issues.

Inspect the interior section for any wear and tear, such as ripped upholstery, stains, or non-functional components. Pay attention to the functionality of essential features like the air conditioning system, audio system, and electrical components.

The mechanical condition section is vital as it provides insights into the car’s engine, transmission, suspension, brakes, and other essential components. Look for any signs of leaks, unusual noises, or poor performance. If possible, arrange for a test drive to assess the car’s driving dynamics.

Using a Vehicle Condition Report to Make Informed Decisions

Understanding a vehicle condition report is crucial for making informed decisions when purchasing used vehicles. This report provides valuable insights into the vehicle’s current condition and can help you negotiate pricing and terms effectively. Here are some tips for leveraging the vehicle condition report to your advantage:

  • Compare Vehicle Condition Reports: If you’re considering vehicles from multiple sources, compare the condition reports side by side. Look for discrepancies in the descriptions or ratings provided. This will help you identify potential red flags or inconsistencies.
  • Ask Questions: Use the information provided in the report to ask relevant questions about the vehicle’s condition. If the report mentions an accident, inquire about the extent of the damage and the repairs that were done. Sources of Condition Reports vary, so be sure and ask what tests were done. 
  • Check for Modifications: Be aware of any modifications made to the vehicle. Aftermarket modifications can affect the value of the car, its warranty status, and potentially introduce complications with insurance.
  • Calculate Repair Costs:  By detailing existing damages or mechanical problems, the report allows dealers to estimate the cost of necessary repairs or improvements. This is crucial for budgeting and ensuring that the investment in a vehicle is likely to be profitable once it’s reconditioned and sold.
  • Use the VIN to pull the Vehicle History Report: The VIN is tied to data collected from motor vehicle departments, insurance companies, law enforcement agencies and body shops. You can use it to find out about previous owners, accidents, theft, recall information, and odometer accuracy.

Show your bottom line some unconditional love with floorplan financing from AFC 

Independent dealers tend to have a sixth sense when it comes to seeing the value in cars of all conditions and sources. That’s why at AFC, we accept and floor purchases from over 1,300 inventory sources, including customer trade-ins, dealer-to-dealer trades, non-auction purchases, and lienholder payoffs. It’s just another way we never stop working to help independent auto dealers grow their business and dreams.

Ready to get started? Get started on your application for floorplan financing from AFC today!

 “AFC” refers to Automotive Finance Corporation, AFC Cal, LLC and Automotive Finance Canada Inc. in their respective jurisdictions. All California transactions are through AFC Cal, LLC. California loans will be made pursuant to California Department of Financial Protection and Innovation Lenders License. All Canadian transactions are through Automotive Finance Canada Inc. 

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