Car Auctions: Are They a Bargain Success or a Financial Pit?
When it comes to buying a used car, car auctions are an option that many people consider. They offer huge potential savings that are hard to ignore.
Auto traders, co-part, Cars and Bids, and other companies host car auctions where you can bid on used cars. But how car auctions work and the process of purchasing a car at them is a completely foreign concept to most.
Many may think they are a great option to come up on some real savings. However, are they truly the best option for buying a used car?
In this article, we’ll explore three parts of car auctions. What they are, how to find car auctions near you, and the pros and cons of buying a used car there.
We’ll also throw in some additional nuggets for you!
– Table of Contents –
- What are Car Auctions?
- Types of Car Auctions
- How Do Car Auctions Work?
- Finding Car Auctions Near You
- Advantages of Buying at Used Car Auctions
- Disadvantage of Buying Used Cars at Auctions
- The Process of Purchasing a Car at an Auction
- Alternatives to Car Auctions
- Is A Car Auction Right For You?
What are Car Auctions?
Car auctions are events where used cars are sold in a bidding-style environment. The highest bidder is the one that wins.
These auctions can be hosted online or in person. They are often used by car dealerships, rental car companies, and other organizations to sell or buy used cars.
Most car auctions are private and require a dealer license to attend. However, there are a few that are open to the public, allowing anyone to attend and bid on a car.
Many of these public auctions are frequented by car dealers and auto traders as well.
Types of Car Auctions
There are many different types of car auctions out there.
Public auctions, on the other hand, are open to anyone who wants to attend and bid on a car.
Auto auctions are also subclassified into numerous types.
Insurance Auto Auctions
The most notable being insurance auto auctions. These are car auctions where people can purchase used cars involved in some sort of accident or have a salvaged title.
Police Car Auctions
Police car auctions are also very common and are typically always open to the public. These hold used cars that have either been abandoned after getting impounded or held for evidence and never recovered.
Buy Here Pay Here Auctions
Buy here pay here auctions are less common, but bigger buy here pay here dealerships make them available at times. They take trade ins which may not align with their inventory. They will choose to sell them to the public instead to recoup some of their money back.
There are also junkyards that hold public auctions for any of their used cars that are functional.
While these are the most common, there are plenty of other niche auctions like classic cars and the like available.
Auto traders find their specific niche and focus their sole attention on these types of car auctions.
Carsandbids is an online car auction site that specializes in modern and collectible cars. There is also Co Part if you prefer the in-person feel instead.
How Do Car Auctions Work?
Car auctions can be a complicated process so let’s find out how they work.
Prior to the Car Auction
At a car auction, each vehicle is assigned a lot number and kept at a specific location. Depending on the type of auction, you may be allowed to inspect the vehicle prior to the date of sale.
If this option is not provided, we highly recommend you add a big cushion for unknown risks.
Date of Sale at the Car Auction
On the date of sale, the used car is placed on the auction block or run through a lane.
Some auctions have auctioneers that announce the used car on the lane and create elevated energy to excite bidders. Others take a more casual approach without auctioneers.
Bidding on a used car at auction
Bidders have a set amount of time to place their bids, and the car is sold to the highest bidder.
Some car auctions have a reserve price. This means that the car will not be sold unless the bidding reaches a certain price.
On many occasions, you may get the highest bid. If the seller placed a reserve on the vehicle and you didn’t meet it, you’ll end up on offer status. The seller would either accept or counter your bid and you would then have the opportunity to do the same.
Finding Car Auctions Near You
There are several ways to find car auctions near you.
You can search online using specific keywords. These include “car auctions near me,” “auto auctions near me,” or “buy here pay here near me.”
Check local car dealerships, junk yards, or police stations to get additional guidance on where to find them. Auction houses may also be a resource you can turn to.
Some auction companies like Co-part have a searchable database of auction vehicles.
Advantages of Buying at Used Car Auctions
There can be some big advantages to buying used cars at auction.
The biggest advantage of buying a used car at an auction is that you can potentially save money.
This is typically the allure behind anyone considering purchasing used cars at auction.
Used cars at auction are often sold for less than their market value. This means that you could get a great bargain.
Auto traders bank on this and do it often enough to learn and game the system.
Finding Hard-To-Find Cars
Another advantage is that you may be able to find rare or hard-to-find cars at auction. Classic cars, niche styles, or out of production brands pop up all the time.
Your credit doesn’t matter.
There is also the added benefit of not having to worry about having a bad credit score. Since the car buying process is different, your credit score range doesn’t matter. You could purchase with good credit scores or buy a car with bad credit.
However, there are some credit limits you run into with car auctions.
Disadvantage of Buying Used Cars at Auctions
While there are certainly benefits to buying a car at auction, there are also some major drawbacks to consider.
Limited inspection of the used cars
For one, you may not be able to inspect the car before you buy it. This means that you could end up with a vehicle that has a myriad of hidden problems.
Stress & Overwhelm
Additionally, the bidding process can be stressful and overwhelming. If you’ve never had experience with any type of auction, I guarantee that you will feel very overwhelmed.
Many people lose track of the process and get outbid without realizing it. Others find themselves caught up in the excitement and paying way more than they intended.
Time & Effort Spent at Car Auctions
A big disadvantage is having to do all of the legwork yourself. This may not seem like a big deal to some. After all, you’ve got some spare time, right?
Once you realize how much work and time is involved, you may regret it.
Limited Loan Options
One of the biggest drawbacks to car auctions is a lack of ability to get loan offers. If you are trying to find out how to get a car loan with bad credit at an auction, good luck.
Banks or credit unions, online lenders, or self-lending dealerships will not provide any type of credit for car auctions.
It doesn’t matter what your credit history looks like or the loan amounts. Even with their own internal credit scoring models or higher interest rates, they will not lend on this.
Your only options are to purchase in cash, obtain a secured loan, or a personal loan. Two of these will require credit reports to be ran and your fico scores to meet a minimum credit score.
If you don’t, you’ll have to work on improving your credit first…or keep saving.
The Process of Purchasing a Used Car at an Auction
There are a few things to keep in mind if deciding to attend a car auction and bid on a vehicle.
Registering for the used car auction
First, you’ll need to register for the auction and get a bidder’s number ahead of time.
Once you’re approved, you’ll want to take the time to determine the type of used car you want.
Determine what type of used car you want
This means thinking about the style, year, make, mileage, and model. It may also mean the overall condition you’re willing to take on.
The last thing you want is to blow all your time looking at every single car at the auction. It will be a huge disappointment when you find nothing that fits your wants.
Inspecting the Used Cars Thoroughly
If the car auction lets you inspect the used cars, you’ll want to make sure you do so.
Once you’ve found the right used car, you’ll note down all of the defects and repairs it needs. Anything it would need to get it to tip-top shape.
Researching Costs & Values
Research how much each of these defects & repairs would cost you and write down the total.
You’ll also want to research the market value to determine a ballpark figure of what you’d normally pay.
There may also be buyer fees, DMV fees, or hidden fees that you’ll need to uncover. Make sure to include these in your expenses.
Your Winning Used Car Bidding Formula
Take this market value and reduce the total expenses you’d need to do on the used car.
This is your maximum bid. It’s that simple!
Place a Bid
All that is left is placing your bid and making sure you remind yourself of your max often.
When bidding, it’s very easy to get wrapped up in winning. If you don’t stick to your budget you’ll easily get caught up in bidding wars. Say goodbye to your hard-earned money.
After You Win
Finally, if you do win the auction, be prepared to pay for the car in full on the spot. You will also need to take possession of it immediately.
This means getting a tow truck ready or another driver ready to help you take it home.
At first glance, it seems as if the initial product and service is all you need to worry over. Unfortunately, it doesn’t end with the car.
Alternatives to Car Auctions
If you’re not comfortable with the risks associated with buying a car at auction, there are other alternatives available.
Buying from a Used Car Dealership
One option is to buy a used car from a dealership.
Used car dealerships typically go through this entire process themselves. They then fix up the vehicles so you get them ready to go. They may have financing options and warranties, plus the ability to inspect the car before you buy it.
Buy Here Pay Here Used Car Lots
If your credit is poor or you don’t have credit, a buy here pay here dealership is a great option. They can help get you a quality used car with easy bad credit auto financing.
Our own buy here pay here dealerships specialize in getting bad credit car loans and no credit auto loans approved. We also offer low down payments, individually tailored and affordable payments, and flexible terms. To top that off, we report our customers’ payments to credit to help them increase their scores!
If we are not within your area there are still options. Do a quick search for buy here pay here near me to find plenty closer to home.
Another option is to buy a used car from a private seller. Private sales can be riskier, but you may be able to negotiate better initial savings.
Is a Car Auction Right For You?
Car auctions can be a good option for buyers who are looking for a deal on a used car. If you’re prepared to take on all of the legwork and risks involved, this is a great route.
Keep the Risks of a Car Auction in Mind
However, do not be blinded by the idea of saving big.
Most people who regularly purchase their used cars at car auctions, auto traders, are very experienced with the process. Auto traders understand how to maneuver their way through it so they come out on top.
They may make it look easy, but it’s far from the case.
If you’re willing to take on the risk and the work involved, we encourage you to give it a shot.
For most people, however, we highly caution you to stay away.
Most regular people who purchase at car auctions lose a ton of money. They end up paying less for the car upfront. After fees, repairs, and other expenses, the used car costs them way more than buying through a dealership.
If risks associated with buying a car at auction scare you, consider buying from a dealership or private seller instead.
If it doesn’t, then happy bidding to you!
What is Carsandbids?
- Carsandbids is an online auction site that specializes in modern and collectible cars.
What is Co-part?
- Co-part is a company that hosts online and in-person car auctions.
Are cars at auction sold as-is?
- Yes, cars purchased at auction are typically sold “as-is,” which means that there is no warranty or guarantee.
How can I find car auctions near me?
- You can search online using specific keywords. These include “car auctions near me,” “auto auctions near me,” or “buy here pay here near me.” Check local used car dealerships and auction houses that specialize in car auctions.
What are the risks associated with buying a car at auction?
- Some of the risks include limited inspection, competitive bidding, limited options, hidden fees, and no warranty.
Can anyone attend a car auction?
- Private auctions are only available to car dealerships with a dealer resale license. Public auctions are open to anyone who wants to attend and bid on a car.
Is it possible to get a good deal on a used car at auction?
- Yes, cars at auction are often sold for less than their market value. You need to do all of your pre-planning and inspection of the used cars correctly. If you do, you could potentially save thousands of dollars.
- Two things to keep in mind. If you are wondering what is a first time buyer program for cars at auction, there is none. The same goes for what kind of credit score do you need to buy a car at auction. It will be very difficult to find a car lender that will extend any credit to car auction buyers.
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Additional Resources To Help On Your Journey
We love to share the wealth! Here are some resources and trusted vendors that we personally use. They can help you take care of your vehicle as well as keep your credit and finances in tip-top shape:
High Quality and Affordable Car Parts: Advance Auto Parts
Car Audio & Sound Systems: Eonon
Premium Wiper Blades & Accessories: Clix Auto
Easy Key Replacement & Programming DIY: Car Keys Express
High-Quality Orignal and Custom Car Lighting: LASFIT
Quality Car Parts/Accessories (mats, covers, assemblies): Oedro
Premium Car Detailing Supplies: Chemical Guys
High-Performance Car Parts & Air Filters: KN Filters
High-Performance Parts: Max Speeding Rods
Speed and Performance Parts: Spectre Performance
Air Intakes: Airaid
Original & Aftermarket Wheels: OE Wheels LLC
Battery Tenders: Deltran Battery
DIY Car Extras
In the event your dealer doesn’t provide you a history report: VinAudit
To learn to recondition your old car battery: EZ Battery Reconditioning
For DIY Ford vehicle repair: Ford Shop
To learn to take some knicks out of your car’s paint: High Quality Car Spray
Personal Finance & Credit
For a DIY credit repair course: DIY Credit Repair
To help you get free of debt and increase your credit: What Lies In Your Debt?
For a high cash-back credit card (make sure you only use it as if it’s a debit card!): Laurelroad
We will keep sharing all of our vendors that we have a great experience with. Only the ones we see align with our values as time goes on, both locally and nationwide.