In 2022, around 38.6 million used vehicles were sold in the US. They’re purchased online and in-person all over the country, mostly from private sellers and dealerships.
However, in an age of rampant economic uncertainty, another source of used vehicles has begun to boom in popularity: Car auctions.
Shopping for cars at an auto auction is fast becoming a go-to option for buyers on the hunt for a budget ride. These auctions are being frequented by more car buyers than ever before.
Buying a car at auction is different from buying through a dealership or private seller, however. Find out why you should buy a car from an auto auction, how it works, and some tried-and-tested advice to have a positive – and cost-effective – experience.
If you’re completely new to car auctions, and not sure if you want to participate in one, first read our guide on everything you ever needed to know about car auctions.
How to Buy a Car at Auction without a Dealer License
The process of buying a vehicle at a car auction can differ depending on whether you’re buying in person or online. As a private buyer, you will only have access to public auctions. Private auctions, which are commonly known as dealer auctions, require a dealer’s license. The same is true of some government auctions.
Here’s what the process looks like:
In-Person Auction
Companies like Manheim and ADESA host in-person car auctions. To start the process of attending an in-person auction, you’ll need to go to the company's website to see when and where the next closest auction will be. These locations tend to change often, so make sure you have up-to-date information before you go.
Make sure to go early so you can inspect the cars yourself. You can even bring a mobile car inspector or mechanic if you want. If you’re interested in any vehicles, you can set a maximum bid.
When the auction starts, it’ll be a very similar process to other auctions. There will be a starting price, and interested parties will try and outbid one another.
The highest bidder is the winner. If you win, you will pay your bid price, but you will have auction fees so keep that in mind when setting your maximum bid.
Online Auction
Some of the best online car auction websites include Copart and Insurance Auto Auctions (IAA), as well as Manheim and ADESA. Online auctions have pros and cons. You can shop from the comfort of your own home and have access to a wider inventory of vehicles, including out-of-state vehicles. But you won’t have the benefit of seeing the vehicle in person.
With an online auction, it’ll be easier to find cars you’re interested in since you can set the search parameters and filter only for vehicles that fit your “want” list. Then, all you’ll have to do is set your maximum bid. This is automatic, so you don’t have to be present when the car is up for bid. After the auction’s concluded, the website will notify you if you’ve won.
When it comes to winning, online auctions have the same process as in-person auctions. You bid the highest to win, and you have to pay the purchase price and auction fees. The challenge with online auctions, however, is arranging how to get the car to you.
If the car is nearby, you can simply get a ride there and drive it home. If it’s out of state, you can travel to the location and drive, but that can be a hassle if you bought a car in California and you’re in Maine.
Auto-shipping is a convenient way to shop for vehicles out of state without worrying about the logistics of getting them to you. Shipping is available whether you bought a car that’s 3000 miles away or just a few hours, giving you complete flexibility over where and how you shop.
Tips for Success Buying a Car at Auction
Ready to experience the excitement of buying a car at auction? Here are some tips for success:
1. Know Your Risk Tolerance
Car auctions tend to go one of two ways: you either end up with a total bargain or a complete lemon. Remember, you’re buying these vehicles as-is and without a test drive, which makes buying a car from an auction risky (especially when you’re on a tight budget). Sometimes it’ll pay off, other times it won’t.
Of course, knowing what to look for in the auction room will improve your chances of a happy outcome. But there are never any guarantees or second chances.
That’s why it’s so important to appreciate the risks involved beforehand and accept the fact you might buy a dud. If you’re unwilling to do so or lack the financial means to shoulder the sunk cost, then consider buying a used vehicle through other sources (such as reputable online car-buying sites).
2. Avoid Fixer-Uppers
If you know your way around cars and can fix mechanical and aesthetic problems, then buying a car that needs a little TLC is worth considering. If you don’t have those skills, you could end up buying a money pit.
So we’d recommend not bidding on a car that needs obvious work if you don’t have the skills to do some or all of it yourself. The low-priced vehicles may seem appealing, but you’re not getting a bargain if you have to pay a mechanic thousands of dollars to fix it.
3. Don’t Judge Cars by the Covers
The vehicles at auction, just like a car dealership or private seller, are usually detailed to make them look as good as they can. But be cautious about judging vehicles on their appearance alone.
A dirty car can cover some minor issues like scratches, dents, and dings, but a nice, shiny car doesn’t necessarily mean problems aren’t lurking below the surface. Cosmetic issues are minor compared to serious flaws in mechanical systems or past flood damage.
On a similar note, superficial bumps and scrapes don’t always mean the car hasn’t been looked after by previous owners. This is particularly true at government auctions, where it’s quite common for quality vehicles to have minor cosmetic issues. You do have to be more careful at public auctions, but it’s still worth assessing each vehicle as a whole, rather than on looks alone.
4. Cash Is King
Payment options are somewhat limited when buying a car from a car auction. You’ll need a pre-approved loan or cold hard cash to cover the cost of any bid you win. What’s more, if you take the loan approach, then you’ll still need enough cash to pay the deposit, not to mention the cost of the title, tax, and registration fees.
There are other financial factors to think about, too. Some auction houses accept credit cards, for example, but read through the policy to understand what cards are accepted, prequalification holds, and any other details. You may also have to pay insurance or car shipping fees to get the vehicle back to your home, so factor that into your budget.
5. Not All Sellers Are Made Equal
You can often discern a lot about a vehicle from whoever’s selling it. That’s the case whether you’re purchasing from private individuals or from online car-buying sites, but it’s the law of the land at car auctions.
For instance, government auctions often have old police cruisers on sale. These vehicles may have countless miles on the clock and numerous superficial problems, but they’re from a reputable source with known histories and accurate records of past maintenance.
Lenders often sell repossessed vehicles at public auctions when the owner defaults on an auto loan. While the lender may be reputable, keep in mind that a repossession can happen years into the loan. There’s no guarantee that the owner kept up with regular maintenance during that time, so don’t trust the vehicle just because of the lender.
6. Know Your Limits and Stay Level-Headed
Bidding wars fueled by emotion and competition happen. In the heat of the moment, our natural competitiveness can take over and rationality flies out the window. If you’re not careful, you can end up bidding far more than you wanted to on vehicles that may or may not be worth the money.
Some bidders are just there to drive up a vehicle’s price. As humans, we tend to want things more when we see someone else wants them, so this can color your judgment in the moment and cause you to make an impulsive decision to bid higher than you want.
Set your limits in advance, away from the excitement of the auction, to stay level-headed. Give yourself an upper price limit each time you bid, and refuse to go beyond it – no matter how competitive it gets.
7. Stick to Your Strategy
A planned bidding strategy can mean the difference between getting a great deal or leaving the auction empty-handed – or worse, overpaying. You have to understand the auction process, timing, and how to read other bidders.
Experienced auction buyers use a range of strategies, from starting low and increasing incrementally to sniping – placing a last-minute bid before the auction end to give other bidders minimal time to react. Each strategy has its pros and cons, however, and a lot of the process relies on timing.
8. Carefully Inspect the Vehicle Before Buying
If you’re attending an auction in person, make sure to thoroughly inspect the exterior, interior, and mechanical aspects of the vehicle. Look for signs of damage, rust, or misaligned panels, which may indicate the car has been in an accident. You should also check into the make and model’s known mechanical defects on forums or third-party car review sites.
If you’re not familiar with cars, you can hire a professional to inspect the vehicle on your behalf. While this won’t be as thorough as an inspection in a garage, they can spot problems you may not be aware of.
Save a Truckload of Money with Car Auctions
Car auctions are nothing new, but they’re becoming more popular as buyers look for better deals than the retail used car market can offer. While there are benefits to buying a car at auction, including better prices and more convenience, there are some potential pitfalls and considerations – including how you’ll get your car home.
If you don’t want to drive your car home yourself, auto shipping is a convenient option that gives you safe, secure transportation. So be sure to factor the costs to ship your car into your budget.
Whether you already purchased a car or you’re looking into nationwide car auctions, Nexus Auto Transport offers safe, convenient, and cost-effective shipping options to deliver your vehicle to your doorstep. Contact us today to get a free shipping quote!
