Secrets to Buying a Repossessed Vehicle

Car auctions often sell like-new repossessed cars.

Repossessed vehicles include those that a bank or finance company took back when the owners failed to make the loan payments. According to BenchMark Consulting International, repossession almost always results in a credit loss for the lender. Depreciation, carrying cost, storage cost, reconditioning and auction costs all contribute to an increased loss for the finance company. On the other hand, buying a repossessed vehicle can offer a great bargain for someone shopping for a new car.

Saving Money

You can buy some really nice, late-model vehicles at public auction. Many repos have low mileage and are in excellent condition. Vehicles returned voluntarily by their owners tend to be in better condition. Buying a repossessed vehicle from a bank, credit union or loan company can save you money. Often you can purchase a vehicle at a cost well below market price. Know in advance what cars you are interested in. Go to an auction prepared with the knowledge of a vehicle's trade-in value. You are likely to walk away having made a better deal if you know what a car is worth before you bid.

Knowing Where to Look

Some public car auctions make announcements in local newspapers. More often, though, these types of auctions are not widely publicized. Car auctions are not always public either. Some are private or dealer-only auctions. One of the best ways to find out about repossessed car auctions is if you know someone who works at a local bank who can give you information about the bank's car sale schedules. If this isn't an option, ask the bank where you do business where it auctions its repossessed vehicles. You can also contact professional auto auction companies directly to find out if they resell repossessed vehicles for banks and loan companies. Call the newspapers circulated in your area. Inquire whether the newspaper publishes car auction announcements on a particular day each month. Auction websites are another source for listings of auction sale locations. Online databases allow you to search for repossessed vehicles for sale in your state.

Researching a Vehicle's History

Most cars at auction are sold as is, but sometimes the purchase of a car includes a free 90-day warranty. A later model vehicle will come with any of the manufacturer's warranty that still remains. However, it is up to you to find out if a car is under factory warranty. Call a local dealership that sells the same make and model vehicle. You will need to provide the car's vehicle identification number (VIN). Get the history report for any cars you might be interested in buying at auction. Again, you will need to provide the VIN number. The report will tell you if a vehicle has been in an accident or has a salvage title. Cars scheduled for auction are announced several days in advance, giving you time to do your homework. Some auctions supply potential buyers with these reports for free. If not, a report only costs about $30 to $35 to obtain.

Inspecting the Vehicle Before You Buy

Generally, you are not allowed to test drive a car being auctioned off, but you can inspect the car and start up the engine before the auction begins. On the day of the auction, go early enough so that you have time to perform a thorough inspection of any vehicles of interest. Taking a closer look at a vehicle can help you spot any obvious problems. Check the inside of the car and trunk for signs of dampness. Look under the seats and floor mats. Inspect the exterior of the vehicle for rust, gritty surfaces or paint colors that don't match. When you start the car, listen for knocking or other unusual sounds. Try the heat, air-conditioning, lights, signals and any power options to make certain that they are operating. Check for leaking spots and stains under the car.

References

• BenchMark Consulting International: The Rising Repossession Tide
• "USA Today"; How to Saving Thousands by Buying a Repo; Chris Woodyard; October 2010
• Auto Broker Magic: Using Bank Repo, Seized, Government And Police Vehicle Auctions To Your Advantage
• LeaseGuide: Repossessed Cars for Sale - Repo Car Auctions and Sales