By: Gov Auctions | 19 August 2017
Pros and Cons of Buying a Car at Auction
Buying at auction has become an increasingly popular way to get a great deal on a used car. Thousands of auctions containing seized, surplus, foreclosed, repossessed and fleet vehicles are held every week across the US, and savings of up to 90% on book value are not uncommon if you know what you’re doing and where to look.
But buying at auction can have its drawbacks for the uninitiated, so this guide provides an in-depth look at the pros and cons of auctions and offers some useful tips on how to get your next car at a real bargain price.
Advantages of buying a car at auction
The average car lot has a reasonable selection of vehicles to choose from, often categorised into groups such as economy, family, sports, commercials and SUVs. But the chances of finding the make, model, colour (and price) you’re after can be slim, and usually requires going from lot to lot until you find something close to your desired vehicle. And to do that means running the gauntlet of hungry sales people eager to sell you anything they can, even if it’s not what you’re looking for.
By contrast, a car auction has a large selection of vehicles, all of which you can view on site on the day or online from the comfort of your home. And because numerous vehicles are turning over at every auction, there is a constantly replenishing supply to choose from.
There are genuine bargains to be had at vehicle auctions and those in the know (i.e. car dealers) try to keep this to themselves as much as they can. But with the help of government auction sites, the general public can also gain access to these heavily discounted vehicles.
Fleet vehicles are among the best bargains, as government cars are mostly driven carefully by government employees, serviced regularly according to the manufacturer’s specifications, and come with full documentation. They are normally written down after two or three years and replaced by new vehicles and while some may have higher than average mileages, they still represent great value and can be had for much less at auction than their book value.
Repossessed vehicles can also be a bargain at auction, as many are new or near new and are being sold, not because they have mechanical or structural problems, but because their owners defaulted on their repayments. Repo firms simply want to recoup their losses and significant savings can be had as a result.
Quick and easy
Buying at auction is a fast and relatively straightforward process if you are prepared to do a little homework beforehand. Using a site such as Gov-Auctions will help you locate the vehicle you want and the auction where it is being sold. Most auction houses provide an online catalogue of their latest consignment of vehicles prior to auction day, and many include details of each vehicle such as make, model, year, mileage and a general condition report.
Armed with this information you can then attend the auction, being sure to bring sufficient finances to secure the vehicle if your bid is successful, and if you are not particularly mechanically minded, accompanied by a friend or colleague who knows what to look for when inspecting the vehicle.
When bidding, it is important to know what the vehicle is worth (the book value) and how much you are prepared to spend for it and to not go beyond that amount, even in the heat of bidding. Follow these few simple rules and buying at auction can be an easy (and fun) way to purchase your next vehicle.
Disadvantages of buying a car at auction
Can’t always test drive
A minor drawback of car auctions is that you often won’t be able to test drive the vehicle before you buy it, and while you can tell a lot about a car from its records and how it looks, without being able to drive it, you will be taking at least somewhat of a risk. Having said that, some auctions allow the successful bidder to test drive after the auction and pull out of the deal if there are major faults with the vehicle.
And while you may not be able to test drive it, most auction houses will allow you to do a cursory inspection of your chosen vehicle prior to the auction and this is where your mechanical prowess or that of your companion comes in. Things to look for include:
- The condition of the engine: how clean it is, whether there are obvious oil leaks, how the engine sounds and the condition of belts and hoses. A quick check of the dipstick will tell you if the oil has been changed recently as well.
- The general look of the body work: check for over-sprays inside the doors which could indicate recent body work, look for signs of rust in the trunk, wheel wells, door jambs and chassis, welding marks that would indicate it has been in an accident, worn tires etc.
Contrary to popular belief, not all cars are sold at auction ‘as is’, with no comeback if major problems are found. An auction centre or online auction source will typically offer a 3-month warranty or guarantee free of charge. You can also often purchase an extended warranty for a small fee from the same source.
But it is not usually a problem if you are buying a near new car at auction (as many fleet vehicles are), because many are still covered by the manufacturer’s warranty and even if they’re not, because they’ve been regularly serviced, the chances of a major problem occurring are far less than if you were purchasing an older vehicle with a more checkered history.
While it is true that vehicles are sometimes sold illegally at auctions, particularly through less reputable auction centres, most auction houses have a legal responsibility to ensure that no money is owed on the vehicles they sell.
And checking on a vehicle’s history is a relatively easy affair these days, with many auction houses offering a free VIN report service to prospective buyers. The VIN (Vehicle Identification Number) found on the plaque in the engine bay must match that on the passenger side windshield and also any registration documents to show that major parts of the vehicle have not been replaced.
There are also vehicle history checks available online for a small fee, which you can run before attending the auction. And if you’re buying a government fleet vehicle, the question doesn’t even arise, as they come with a fully documented history.
So is buying at auction a good idea?
At Gov-Auctions, we’re a little biased when we say ‘yes’ it’s a great way to buy a used vehicle, but as this guide demonstrates, the evidence speaks for itself. When buying from a government auction the prices can be substantially cheaper than buying privately or from a lot, and providing you do your homework beforehand, there’s no reason why you can’t drive away in a quality vehicle at a heavily discounted price.