How to Buy a Repossessed Vehicle

A lender repossesses a car when the owner fails to pay on the loan or meet other terms of the loan agreement. Since lenders want to sell repossessed vehicles quickly, most put the autos up for auction, and anyone can participate in the bidding. If you have limited funds and need a vehicle or want to purchase a car to refurbish and resell, you can get a repo car at significant savings.

Difficulty: Moderately Challenging

Instructions

1. Find public auctions in your area. Check the newspaper, or search online for local opportunities. If you can't find an auction site near you, consider an online auction.

2. Have the means to pay. Unless the auction house offers financing, immediate payment is required. If you are the highest bidder, you must leave a deposit—sometimes up to 25 percent of the purchase price—that day. The seller usually requires full payment by cash, cashier's check or credit card within one day.

3. Bring a mechanic to look for defects that your untrained eye might miss, such as flood or collision damage, fluid leaks and corrosion. There usually is time before an auction—from one hour to one day—to check out the repo vehicles.

4. Remember that you are buying the repossessed car as-is. That means that if the mechanic finds flaws, you must be willing to overlook them, as they will become your responsibility. If the previous owner failed to change the oil and engine damage was the result, or the tires are bald, it's your problem once you drive off the lot.

5. Obtain the car's history or research the vehicle identification numbers online before you bid. If you have a mobile device such as a Blackberry, you can get an instant report. A title report reveals whether the car has been salvaged, rebuilt or damaged in a flood. You can find out whether the airbags have ever been deployed, the odometer has been rolled back or there are recalls on that model.

6. Determine how much you are willing to pay. Bring a Kelley Blue Book or Edmunds guide with you, if possible, and check to see how much the auto is worth. Research online, if time allows.

7. Set a limit and stick to it. Remember that the auction house will add a buyer's premium to the final price to cover the cost of the auction.

Tips & Warnings

• It might take you a few auctions before you get the hang of bidding, since it moves quickly.
• Don't get caught up in a bidding war; you could end up paying over the car's value.

Resources

• Purchase a vehicle history report from Carfax.

[repofinder]

on 9/15/2009 The best place to search repo cars is www.repofinder.com. It's free and links you directly to the Credit Unions who are offering the vehicles for sale. No-middleman = no commissions and fees.