Buying from an auto auction

An auto auction facility
An auto auction facility

There are many ways to help you find a car or truck you desire. If you have purchased a car in the past, you probably bought it at a car dealership or from a private seller. But did you know an auto auction is also a place to get a best deal?

Getting a bargain from an auto auction is not easy if you don't educate yourself. With the right knowledge to avoid common mistakes and tips to follow you can be an effective auto auction car or truck buyer. Realize buying a car or truck from an auto auction is full of troubles if you don't know what you are doing. So educate yourself on finding an auction deal.

Important note

Don't expect retail warranties on what you purchase from auto auctions. What you buy at an auto auction is at a wholesale market. Be aware and be prepared for you what you buy at an auction. Cars may have unknown problems. Cars may also be just trouble-free. Regardless, what you buy is your responsibility and risk. You waive the responsibilities of the seller and the auction once you buy the car.

Advantages and disadvantages of buying from an auto auction

Let's start with the advantages and disadvantages of buying a car from an auto auction:

Advantages:

  • the car or truck you bid on could be thousands less than what you pay a private owner or a car dealer
  • you get to see many similar cars or trucks at one location. if you were considering to buy from a private owner, you would have to chase to different places until you find what you are looking for.
  • auctions give the buyer temporary tags immediately after purchase. This allows the customer take the car on the road immediately and without having to go to the DMV (Department of Motor Vehicle) to register and get tags
An auto auction has variety of cars, vans, trucks, motorcycles, and other vehicles.
An auto auction has variety of cars, vans, trucks, motorcycles, and other vehicles.
A truck at an auto auction
A Ford Explorer at an auto auction

Disadvantages:

  • The car you buy could have unknown problems
  • The warranties on what you buy. All cars and trucks are sold as-is and where-is.
  • The buyer's purchase fees (fees added to your bidding price) raise the purchase price. You don't pay these fees when buying from a private seller.
  • You don't get to test drive the car. You test drive after you have made the purchase. Prior to the purchase you have to just make an educated decision whether or not to buy a particular vehicle.
  • The resale value of an auction history car is typically less than what you would pay for a private car.

Understanding auction rules

Even cars looking brand new can have problems.
Even cars or trucks looking brand new can have problems.

Beside the pros and cons of buying at an auto auction, you should also be aware of the auction rules. These rules are very important to understand before you do business with the auction. The rules dictate the responsibilities and the rights of all the parties (buyer, seller, and the auction) involved in any transaction that takes place at the auction. Basically, the auction acts as an agent between the buyer and the seller. For the buyer, the auction provides services tailored to buyer's needs. The services can include: tag services, handling the purchase transaction, and so on. For the seller, the auction registers the car for sale and handles the car sale.

Acting as an agent between the buyer and the seller, the auction has established rules that both the seller and the buyer needs to follow to successfully complete each transaction. So expect the auction rules to cover:

  • seller responsibilities,
  • buyer responsibilities, and
  • the auction responsibilities

As a buyer, however, you only probably need to be familiar with auction rules that apply to you or your purchase. You may not need to concern yourself with the seller responsibilities. It is important to understand that if you purchase the car, you agree with the applicable rules to your purchase. So minimally, you should know these rules that typically apply to all buyers:

  • What you buy is solely your responsibility, whether it is a loss or profit.
  • You understand to do all vehicle inspection prior to making a purchase.
  • You understand what you are buying. Don’t buy a manual car when you think you are bidding on an automatic.
  • You understand the understand communication channels that describe the condition of the car or provide information on the car. Typically, auctions use number of ways to do this:
    1. light system:
      • red light - this means the car has a greater risk. The car may or may not have any visible damage. If you are buying a car for the first time at an auction, avoid a car that is sold on a red light. A car sold on red light probably will have (or has) major defects (obvious or not).
      • yellow light - this is probably less risky than buying a red light car. But be advised buying a car on yellow light is not completely safe. Again, avoid your first auction car on yellow light if you want to avoid obvious risks.
      • green light - a car sold on green light is probably the safest for both first time and repeat buyers. A car sold on green light is probably free of major problems or failures. But don’t rely on the lighting system alone use other clues to guide your purchase decision.
    2. Announcements - besides watching for the lighting system for red, yellow, or green, light, you need to listen. That is listening and understanding any announced condition(s) when it is time for bidding to start. The announced condition could be the car has salvage history.
  • You are not allowed to take children with you at the auction. This keeps the children safe during the duration of the auction.
  • Know the odometer reading. The auction is not responsible for any discrepancies related to odometer accuracies.
  • You need to do you part to verify the car information - such as the year, make, model, VIN number, title, and other relevant information
  • Remember the highest (last) bid is subject to the seller’s approval. So even if you are the highest bidder but the bid is too low for the seller, the purchase is not going to win seller’s approval.
  • You are not allowed to tamper with cars. By the way, the auction is not responsible if you loose your stuff, cash, or vandalism.
  • Understand other applicable information and disclosures applicable to your purchase

Recommendations

Here are some tips to guide your purchase:

  • Don't bid on a car unless you absolutely know it is really worth buying
  • Don't rely solely on the information that is written on the car's windshield or windows with a chalk. Know prior to bidding a 1997 car is not marked as 2000. You don't want to be bidding on a car that is actually older than what is marked on the windshield. Also, don't make the mistake of confusing the lot number, or sticker number with mileage. Understand what is written on the car windows:
    • could be sated incorrectly by the auction staff
    • could be intentionally changed by anyone.
  • If you don't hear announced conditions, immediately ask the auctioneer for the announced condition(s) to be repeated. Again, it is your responsibility to know and understand all announcements and condition applying to the car you are considering for purchase.
  • Keep in mind the seller normally decides how he wants to sell his car. He could choose to sell at a red light, yellow light, or green light. If the car has major problems and the seller is selling on green lights and you bought the car, you will need to talk with the auction staff for arbitration.
  • Consider making your first visit purchase-free. Don’t buy on your first visit instead focus on how the cars are represented, understand how bidding works, and ask any questions you have.
Auction and car information written on a car’s windshield
Auction and car information written on a car’s windshield
  Auction and car information written on a car’s window
Auction and car information written on a car’s window
Posted on 3/24/2008
45,382 views
by Raj Singh