In a NutshellKnowing how to buy a car at auction can help you get a sweet deal for the wheels you want — without the dealership haggling. But if you aren’t prepared for the process, it can be a financially risky way to go.
Buying a car at auction could save you money compared to shopping at a car dealership or buying from a private party.
But if you’re planning to go this route, it’s important to prepare in advance: Know the rules for buying a car at auction and stay flexible while sticking to your budget.
Let’s take a look at how you can do some homework before bidding on a car at auction, along with some things to consider before deciding whether a car auction is the way you want to go.
- Do I need an auction license to buy a car?
- What should I do before I buy a car at an auto auction?
- Is buying a car from auction a good idea?
Do I need an auction license to buy a car?
Whether you need a license to buy a car at auction depends on the kind of auction it is.
Dealer auctions are primarily for car dealers looking to add used cars to their inventory, and you can be required to have a dealer’s license to participate.
Public auctions are open to everyone, no license required. There are also websites that allow the public to participate in certain dealer auctions — these sites may require setting up an account and paying some sort of fee or deposit, but no license.
For both dealer and public auctions — online or in person — the types of vehicles you’ll find might include repossessions, cars seized by the local police department, salvage title cars declared a total loss by an auto insurance company, government-seized and surplus vehicles, title pawns and cars that don’t get sold at dealerships.
What should I do before I buy a car at an auto auction?
Learning how to buy a car at auction could help you get a good deal. Here are some tips.
Research cars in advance
With some auctions, you’ll have the chance to check out the listings before the auction occurs. This gives you a chance to see what’s available and to zero-in on the vehicles you like.
These listings may include a vehicle identification number, or VIN, for each car. You can use the VIN to search for a vehicle history report on websites like Carfax or AutoCheck. These reports can feature important information on the car, including things like the previous owners, major accidents or damage, maintenance history, odometer readings and manufacturer recalls.
Also, be sure to look up the current market value of the vehicle using online tools like Kelley Blue Book, Edmunds or NADAguides. This can give you an idea of how much to bid for the car and when to stop if you get in a bidding war.
It’s OK to be generally set on the kind of car you want, but focusing on one particular listing could set you up for disappointment.
“If you’re quickly outbid, or if [the car] requires a reserve (a minimum acceptable bid) and you can’t meet the reserve, you’ve put a lot of effort into this and that vehicle’s gone,” says Richard Reina, a classic car hobbyist and product training director at CARiD.com.
Instead, Reina suggests focusing on certain aspects of a vehicle that are important to you. For example, say you want a four-door sedan that’s five to eight years old with less than 100,000 miles. With those criteria, you’re more likely to find multiple cars that fit the bill, giving you more options if one doesn’t work out for you.
Know the rules
Each auction can have its own set of rules for participating, so you’ll want to learn those rules in advance. For example, you may need to register by a certain date or provide some form of identification.
You’ll also want to know the payment terms, says Reina.
“Some of these auctions are cash only, and some will accept a credit card, cashier’s check or money order,” he says. “You really want to know that ahead of time. Let’s not expect that they’ll take a credit card only to find out that they won’t.”
Arrive at the auction early
On the day of the auction, if it’s an in-person auction, get there early so you can look at each vehicle that you’re interested in.
Some auctions may allow you to start the vehicle or bring a mechanic to inspect the car. Even if you can’t get behind the wheel or bring your trusted mechanic, you can pop open the hood, check the oil, kick the tires, look under the car for leaks and search for other important red flags.
You’ll also have the chance to look for cosmetic defects that may not have been highlighted in the listing, such as dents and scratches on the outside and rips and tears on the inside.
If the pre-auction listing didn’t include the VIN, you can get it now to look up the vehicle’s history. You can typically find the VIN by looking at where the dashboard meets the windshield on the driver’s side of the car. You may also find it on the driver’s door where the door latches when you close it. Make sure that all the VINs you spot on the vehicle match. If they don’t, the car may have been rebuilt with parts from other vehicles.
Bring someone with you
Buying a car can be an emotional experience, so it’s worth considering having someone with you who can help you stay focused on the facts.
“Sometimes a second set of eyes is nice, just to be an objective voice,” says Reina. “For example, I may attend an auto auction, get fixated on one car and say out loud, ‘You know, I always wanted a red car,’ and my friend may say, ‘Richard, the windshield’s cracked, the upholstery is torn on the driver’s seat and the windows don’t work.’”
It’s possible to get so fixated on one feature that you miss some red flags. Having another person at your side can help you remove the blinders and avoid making a decision you’ll regret.
Stick to your budget
It can be easy to get swept up in the excitement of an auction, but if you make the winning bid, you’re typically obligated to go through with the transaction — and you may need to pay some or all of the cost immediately.
Take some time before the auction to determine your budget for your new car, and then keep that number in mind when you’re bidding. If you don’t get the car you want, remember that there are always more cars and auctions, so it’s best to back down, regroup and keep looking until you find a car that fits your financial situation.
Also keep in mind that some auction houses may charge what’s called a “buyer’s premium,” says Reina, which you’ll need to pay on top of the sales price. It can either be a flat fee or a percentage of the bid.
“It’s not always a big chunk of money, but it’s still something you should be aware of,” he adds.
Is buying a car from auction a good idea?
The idea of scoring a low price on a new-to-you car is appealing. But there are some things to keep in mind as you decide whether buying at an auction is right for you.
The car is sold as is
At a car auction, you don’t have the opportunity to customize a vehicle or choose from a wide selection of the same make and model as you likely would at a dealership. If you have a specific color, features or add-ons in mind, an auction may not be a good fit for you.
If you can’t test drive the car before bidding, there’s a chance that you could end up with a car that has some problems that aren’t apparent until you get behind the wheel.
For minor repair and maintenance issues, this might not be an issue — the savings you can get from buying at auction can give you some wiggle room. But if there are major problems, you could end up stuck in a money pit, with no chance for a refund.
You may need cash to buy the car
If you end up buying a car at a live auction, you may need to pay for all or a portion of it upfront.
Be sure to check with the auction house in advance regarding accepted forms of payment. You may be able to use cash, a debit card, money order or cashier’s check.
Paying by credit card may also be an option. Just keep in mind that if you don’t pay off your card quickly, any interest charges could end up canceling out some, if not all, of whatever you saved by buying a car at auction.
Auction cars may not be in the best shape
Depending on the vehicle, it could have a lot of miles and wear and tear or be in poor condition due to neglect or significant damage.
As a result, used cars bought at auction typically don’t come with a warranty or any guarantees from the auction house. That doesn’t necessarily mean they’re bad — an inexpensive car that runs well enough to get you to work or school may be all you need. But it’s important to set the right expectations before you start the process.
Salvage auctions can be even dicier
If you’re planning to depend on the vehicle for everyday use, buying from a salvage title auction isn’t a good idea. A salvage title means that an auto insurance company declared the car a total loss due to an accident or other issue.
These cars will likely have significant damage or defects. And depending on where you live, driving a salvage-title vehicle could be illegal. But if you’re looking to buy a car to fix up as a hobby, it might be worth checking out what’s available.
Buying cars at auction may not the best way to go for everyone. Take some time to think about what you’re looking for in a car and your financial situation. If you aren’t willing to be flexible regarding the car make and model or don’t have cash on hand, an auction may not be the right fit.
Buying from a dealership or private party can be more expensive, but you may be able to get a car loan if you don’t have the cash to buy the car outright.
But if you’ve decided to buy a car at auction, take some time to prepare before you go. Consider visiting a few auctions just to get a feel of the environment and selection. There’s no right way to buy a car for everyone, so understanding your situation and easing into the process can be helpful.