December 12th, 2016
Buying a car is a big investment, however the purchase price for the vehicle doesn’t represent the entire cost. In order to start driving, you’re going to need to budget some additional money to pay for upkeep, insurance and a few other things that might arise.
Failing to budget correctly for the extended costs associated with operating a motor vehicle might render your new car inoperable or illegal to drive. Worst case scenario – you might need to resell your car for even less than you paid for it.
You should always have a set limit that caps any purchase made at an auction. Going over your bid means less money to put towards any additional costs that may come alongside it, and will stretch your wallet further than it might need to. Remember, if you have to concede defeat at an auction due to the price going over your maximum bid, there’s always a chance that another, even better deal will arise next time! With that in mind, here are the 5 things that you should ensure you budget for when buying a car at auction.
Most cars sold at auction are explicitly sold ‘as is’. That means that the dealer accepts no claim for anything that might need tuning or fixing within the car at the time of purchase, and that all later costs are the responsibility of the buyer.
It’s also quite common to see cars at auctions that have a few miles on the clock, weathered paint, rust or dints in the body. It’s a fact of buying – especially with used cars – and most auction goers should expect to budget a little extra money to get the car into a more respectable condition.
If your auction has a viewing day make sure you take advantage of it! Being able to see the wear and tear on a car will help you adjust any budgeting that you might have to do, and you’ll also be able to keep an eye on which vehicles might be a better investment for your money.
As a final note on this – there’s no safety net if you buy a car that ends up having some unforeseeable mechanical issues, or one that manages to break down completely a week after you purchase it. ‘As Is’ definitely means ‘as is’, so don’t spend the absolute last of your savings on something if you’ll be left high and dry if it stops working.
Experts believe that it costs the average household $1,681.50 per year on fuel alone to keep a car running, and failing to consider how much ongoing costs will impact your ability to maintain a vehicle can be disastrous if you don’t plan forward accordingly.
This obviously won’t be a consideration off the bat, since you’ll only need to be budgeting for the first tank of gas, but you’re going to need to have a look at your overall finances and see whether you can afford a minimum of $1,000 for light driving, and upwards of $2,000 for extended driving over a year.
Another cost to take into consideration is the transfer of registration fees, as well as the cost of acquiring a roadworthy certificate if the vehicle isn’t registered. Registration fees vary from state to state, and this is an additional cost you need to consider along with general upkeep.
You should notify your state’s DMV that you have purchased a vehicle within roughly 10 days of taking possession (again, this may vary between states). If you buy a used car at auction, you must not only submit a title transfer application, but depending on your state’s requirements you may also have to provide a vehicle identification number(VIN), an odometer reading and a bill of sale. Remember, vehicle owners may be issued a late fee if they their vehicle registration expires.
If you’re looking to insure your car, which is a wise investment, you should budget for the average amount that it costs to insure a car in your state. Your age, gender, marital status and location all affect how much you car insurance costs. The reason for this is that insurance companies hold large amounts of data and are able to use this to infer the level of risk that a driver presents. The more ‘at risk’ a driver seems, the larger their premium will be.
The average annual cost of car insurance paid in the US in 2014 was $907.38. However, this can vary greatly between state to state. For example, in Michigan in 2016 the average price of car insurance was a massive $2,551 annually, compared to $964 in Maine. So make sure you do your research accordingly and account for this additional expense.
When it comes to auto insurance, always make sure to shop around and ask for a quote before making any major decisions. If you’re not interested in auto insurance, you should budget a minimum of $1,000 to make sure that you can cover any additional annual costs that might spring up alongside the purchase of your car.
On top of everything else, if you can afford it, we strongly recommend having an additional 10% saved on top of everything else as a buffer for any unexpected or outstanding occurrences. So before you place your bid at your next auto auction, make sure you are aware of the additional costs associated with running a vehicle. If you’re planning on buying a second hand vehicle, make sure to try Gov Auctions, America’s most trusted auction for Government seized and surplus car sales.