At car auctions, you bid against other buyers instead of negotiating with dealers. Unlike shopping at a dealership, you usually can’t get a refund on cars bought at an auction and you often won’t get a vehicle warranty either. It’s important to make sure you thoroughly check the condition of any car before bidding on to avoid ending up with a raw deal. With some background homework and some luck on your side, you could end up driving home a steal.
Buying a car at auction can yield mixed results. In some cases, you could drive off with the best steal at the auction, securing a rare vehicle at a great price, or you could end up inheriting a lemon that needs constant repairs.
How well you will fare at buying a car from an auction depends on you doing your homework before buying and, well, a bit of luck.
Here are some key factors to keep in mind when deciding on buying a car at auction:
Auction houses access used cars from a variety of sources, such as ex-police or government cars, cars repossessed by finance companies and former rental cars that are due for replacement. You can find auctions that only deal with specific types of vehicles like classic cars, as well as more general auctions.
Here are 7 steps to buying a car at auction:
Search online for auctions in your area. After you find one you’re interested in, check to see if there’s a catalog available of the vehicles that will be auctioned. This typically provides information on each car’s model, ownership history and potential costs for maintenance and repairs.
You also might want to consider visiting a few auctions in advance to get a better understanding of how they work.
You’ll likely need to register for the auction and provide identification in advance. You may also be required to prove you have enough money to pay for a car at auction, so have a bank statement, credit card statement or loan pre-approval offer on hand just in case. When you get to the auction, the auctioneer will give you an identifying marker like a numbered car or paddle which you can then use to make bids.
Don’t rush to bid on the first car you see. Look at each vehicle to compare builds and see which one you’re interested in most. If the seller is at the auction, ask them why they’re choosing to sell the vehicle and if there was any repair work that was done. If you have any questions or concerns about a vehicle, raise them before the auction rather than after it commences.
If possible, look thoroughly at the interior and exterior of the car to check for defects, such as signs of previous accidents, rust or broken parts. Check for registration papers as well as the vehicle identification number (VIN).
The VIN can typically be found on the dashboard, driver’s side door and in front of the engine — make sure the numbers match, otherwise the car might be stolen. You can then use the car’s VIN to look up the vehicle history report, which verifies ownership history, accidents and repairs.
This is when you’re facing off against other people interested in purchasing the same car as you. Vehicles typically come with a reserve price, which is the lowest bid that will be accepted. If no bid reaches the reserve price, the seller can choose not to sell the car. But if a bid is above the reserve price, the seller must accept it.
If you have the highest bid at or above the reserve price, you’re required to complete the sale. For whichever car you’re interested in buying, keep the market value in mind to determine if you’re actually getting a good deal.
You can try doing this if a car failed to reach the reserve price. You can possibly get the seller’s details from the auctioneer to negotiate with them directly.
If you’ve bid successfully, you’ll generally be asked to make a down payment of around 10% at the end of the auction. This is why it’s a good idea to have a pre-approval offer from a few different lenders to prove you have the funds available to pay for the vehicle.
Compare the lenders below to find the right car loan for your auction purchase.
You have a few options when it comes to financing a car you bought at auction:
Although buying a car at auction can be cheaper than getting one at a dealership, the costs can be unpredictable. You may not only need to pay for the car itself, but also taxes, buyer’s premium, registration fees and any repairs that need to be made. Adding up these extra expenses can help you figure out how much you’ll need to borrow.
If you opt for a car loan or personal loan, you may want to consider getting preapproved from a few providers so you know how much you have to spend. This can also give you an idea of what rates and terms you qualify for so that you can find the best deal available to you.
Generally, no. Most auctions require you to have some form of payment ready with you before bidding. Though some online car auctions provide financing, you should still have a backup form of payment ready, just in case.
Ready to start bidding? Here are a few pointers to help ensure your car auction experience goes smoothly:
It’s easy to get caught up in the quick-moving energy of a car auction. But beware of the following points:
Always give the car a thorough inspection before buying. Try following this checklist to make it easier:
If you’re new to the auction game, preparation is key to helping you get a good deal. Here’s what you can do to set yourself up for success:
Ben, a resident of Ontario, wants to attend a car auction to find a cheap, used vehicle he can use to drive to work.
Because of his strong credit history, Ben’s bank approves him for a $8,000.00 unsecured personal loan. To participate in the auction, he’ll have to bring a bank statement with him to prove he has the money to back his bids.
Ben wins a $5,500.00 bid for a black 2013 Hyundai Elantra GL with 126,000 kilometres on it. He pays the price as well as a buyer’s fee of 15% ($825.00) and 13% HST. The title is transferred to his name, and the car is now his.
He registers the vehicle with the provincial government for $150.00, which includes the cost of a license plate sticker and vehicle permit (he can reuse his old plates, so he doesn’t need to buy new ones). After having the vehicle inspected, he ends up paying an additional $800 in repairs.
Between the bidding price, buyer’s fee, HST, repairs and registration costs, Ben pays around $8,100.00 total for his car ($100.00 of which had to come out of his savings). Models similar to Ben’s can sell for up to $8,000.00 before repairs and registration fees, so he seems to have gotten a good deal. However, if he had placed a higher bid, or if repairs had been more expensive, he could have ended up spending more than if he had simply bought from a dealership or a private seller.
| Cost of used car | $6,325.00 ($5,500.00 bid price + $825.00 buyer’s fee) |
| Loan type | Auto loan (term loan) |
| Loan amount | $8,000.00 |
| Interest rate (APR) | 7.90% |
| Loan term | 3 years |
| Additional fees | 4.00% origination fee ($320.00) $0.00 application fee (waived by lender) |
| Payment | $250.32 monthly or $115.35 biweekly |
| Total loan cost | $9,011.52 with monthly payments or $8,997.30 with biweekly payments |
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
Yes, you can buy a car at an online auction. In some cases, the virtual route may be a better choice for first-timers because in-person auctions can be pretty intense.
Online auctions operate in a similar way to in-person ones. You’ll need to register ahead of time and you can search through the listings so you can home in on the vehicles you’re most interested in. The auction should list important information, such as the model of the car, the year of its make, its mileage, condition, fuel and transmission.
You can also control your search parameters with online auctions so you’re only shown cars within your price point or other desired features. If you set a budget, the auction platform won’t show you any vehicles priced above your maximum allowance.
Bidding is done virtually and held over a set period of time. This gives you time to research the car, check out its specs, and watch for competitors bids. If you place the winning bid, the car is yours.
Do your homework on auction fees and guidelines on payment, so you are prepared to make your purchase. You should also make sure you’re joining a legitimate auction that vets its vendors carefully.
You may be able to save thousands on a new-to-you car by heading to an auction instead of the dealership. But like with any used car purchases, you’ll need to thoroughly inspect the car and vehicle history report to ensure you don’t end up with a lemon.
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