Repossessed Vehicle Auctions - Frequently Asked Questions (FAQs)

One of the most cost-effective places to buy used cars dirt cheap is at reposed vehicle auctions. Nowhere else will you be able to drive home with a car in good working condition for such an embarrassingly low price, you would almost feel like you are ripping them off. Here are the answers to some frequently asked questions if you are in the market to buy a car and aren't sure whether buying a car at an auction is right for you.

How do cars end up at auctions?

Essentially, when the owner of a car is no longer able to maintain possession of it, the government will typically intervene, and repossess the car. But because the government is not in the business of buying and selling cars, and views these cars as liability it sets up a venue to dispose of their burden, directly to the general public in the form of an auction to whomever is willing to pay the most for the car.

Some reasons a car can be repossessed included: death of the owner, incarceration of the owner, the owner is unable to make payments on the car, the owner is party to a lawsuit and must handover his or her assets in order to satisfy the debt, or the car is part of a criminal investigation.

Who owns the cars at an auction? Who are we buying the cars from?

Whoever owned the car at the time it was repossessed remains the owner of the car until it is auctioned off to the highest bidder, unless the owner is deceased, in which case the owner's estate "owns" the car. If the car was being financed, then the finance company is entitled to the amount of the highest bid up to the total balance due to pay off the auto loan.

Can I finance a car at an auction?

Typically, auctions require you to pay the winning bid amount in cash in its entirety before you can take possession of the item.

What happens to a car if nobody buys it?

The car may be retained for the next round of auctions.

How do they price them so cheap? How do they price them at all?

If there is a lien on the vehicle, the opening (minimum) bid will typically be the amount required to satisfy the lien (pay it off). The lien could be a car loan or any other judgment for which proceeds from the sale would go toward paying it off.

Are the cars warrantied or anything?

Cars sold at an auction are sold as-is, without any warranty of any kind, except for any manufacturer warranty still in effect. It may be possible for you to shop around and buy your own warranty on the car, though.

What kind of condition are auctioned cars in?

These cars could be in any condition, ranging from immaculate to total junk, depending on the condition the car was in at the time that it was repossessed. While you may have an opportunity to visually inspect the vehicle before buying it, the old adage of "buyer beware" applies. It can also be helpful to get a CARFAX REPORT, which basically is a report that includes any and all damage and repairs done to the vehicle. This way you will know whether the car has been in an accident and whether it has any potential problems you might not otherwise know about.

Is buying a car at an auction right for me? Why should I buy at an auction and not from some other traditional means?

Is it right for you? It depends on a lot of factors: How much money are you willing to spend on a car? Are you willing to buy a car that has not been inspected and certified for being in a road-worthy condition? Are you looking to buy a car with the intention of fixing it up and reselling it? Do you have the cash resources to buy the car paid in full or can you borrow money from another source?

Why doesn't everybody do it?

Lack of awareness. Auctions are not highly publicized the way the way retail or third-party car sales are, due in part to these being mediated by government, not-for-profit agencies.

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