How to Buy a Used Car from an Auction
This is the second installment in a three part post. Part one discussed how to buy a used car from a private party. This section will discuss the overview of buying a used car from an auction.
There are two different types of auctions, dealer auctions and all the rest. Dealer auctions are conducted by various auctioneers across the country including Mannheim. In order to buy at or even visit these auctions you need to be a licensed auto dealer in your area. These auctions are where auto dealers auction used cars that were traded that they don’t want or can’t sell, rental car companies unload entire fleets, or wholesalers sell cars they have acquired from their sources. Finance companies and lenders will also auction repossessed cars here as well. These auctions are the most likely to have a great selection of quality used cars.
If you do not have an auto dealers license than you need to find a dealer that is willing to acquire a vehicle for you. You can find these on Craigslist sometimes or in the newspaper. Any used car dealer (and new car dealers in many areas) is able to do this, the question is what level of service you will receive. The advantage to buying a used car in this manner is that you are likely to get a great deal at prices below private party prices. With the right dealer at your side, you can find some real gems.
There are disadvantages though. This is a professional’s game, and it is no joke. The auction moves fast and you will be bidding against people that do just this for a living. You could easily get roped into paying more for a used car than you should. Basically, if you have the highest bid, you probably overpaid. So make sure you have done your research and work with someone you trust. Also, you will not be able to test drive the car or be able to have a comprehensive prepurchase inspection done. So there is a certain leap of faith required.
Depending on your state, you will likely have to pay sales tax and other assorted fees since you have to conduct the transaction through a licensed used car dealer. Depending on the dealer are working with you may have to pay for the car at the auction itself, so if you are planning on financing the purchase of the used car this can complicate things.
The rest include any auction that is conducted by government agencies or any auction that allows any average Joe to participate. I would not recommend buying anything at any of these, unless you are prepared for the possibility that you will end up with a piece of junk. These auctions are often promoted as having repos or trade-ins, but likely they will have one or none of these. I would stay away from these.
Interested in learning how to buy a used car from a dealer? Read part 3.
