A public car auction can be a fine opportunity for getting a great deal on a used auto. But if you go into an auction without having made the proper preparation, you could instead end up making a mistake you will long regret. I am not trying to scare you from buying your next car at one of these public auctions. There are, indeed, good bargains to be found there. But I want to point out the pitfalls you can face, so you can be better prepared to avoid them.
Let me tell you about a bad experience my family had with a public car auction, some ten years ago. My father had heard that you could get a car at an auction for around $500, so he decided to try one and I went with him. It turned out that we had to pay $200 for the registration. My father shrugged it off and ended up purchasing a used Cimarron for closer to $1,000 than $500. There were cars that we could have bought at around $500 but they were in much poorer condition. I noticed that these cars tended to be purchased by auto dealers and mechanics. In any case, my father seemed satisfied, though less than enthused, with the car he did get–until he tried to take it off the lot. I won’t go into details, but let’s just say the car required another $500 in parts and repair so we could use it.
That was certainly a bad experience, but it later served me as a learning experience when I attended other public auto auctions. And I was much more successful at those. But I am sure you would not want to go through a bad experience yourself just to earn the wisdom you would need to be successful at an auto auction. So let me explain how you can reduce your risk of getting a bad deal. Now, I cannot guarantee that you will not end up with a problem at a car auction, but if you keep my advice in mind, you will surely stand a better chance of coming out ahead at one.
Every public auction has an inspection period when you can view the vehicles and maybe even start them (though you will not be able to test drive them). Be sure to attend the inspection period and to note down the vehicle identification number of any car you are interested in. Then you are well-advised to track down the car’s vehicle history report on Carfax. This will tell you the car’s ownership and service history, and also alert you to previous accidents or problems associated with the vehicle.
You should also check the car’s trade-in value with a Kelley Blue Book. (You can also use their website at kbb.com.) This is essential so you can determine your bid properly. You should also take into account the registration fee for the auction. Furthermore, you must realize that the winning bid you make on a car is not equal to the full price you will pay. You also have to pay a buyer’s premium, which is 5% to 10% of the winning bid. You must factor this additional cost into your bid.
Also, a car from an auction is sold “as is” with no warranty. You are strongly advised to get a used car extended warranty for it. Therefore, you should add the cost of the warranty to your total costs.
Finally, be sure to clear out your calendar for the day of the auction. If you end up winning a bid at one, you can end up waiting most of the day as the car papers are processed, before you can drive it out of the lot.