Business & Finance Bankruptcy

Checklist for Buying Cars at an Auction

    Preparation

    • Buyers can decrease the likelihood of paying too much for a car by doing diligent research before bidding. Each auction offers a different amount of information, but at the very least potential buyers should be able to request a catalog of vehicles being offered that includes vehicle identification numbers (VINs) and some basic information on each one. Purchasing a vehicle history report online using the VIN can reveal any past damage. Checking local classified ads to see what similar models typically sell for will help determine the fair market value of the car.

      On auction day, it is important to physically inspect each vehicle you might bid on. If you are not familiar with cars, you can bring along an experienced technician or do-it-yourself mechanic to help identify potential problems and estimate what they might cost to repair.

    Funds

    • Car auctions typically accept bank drafts to pay for the cars, though some might also take personal checks or even cash. Drivers who pay by check need to have adequate funds in the account and bring a blank check, along with proper identification. Bank drafts are more secure than cash and guarantee the funds in the account. Without proper payment, a buyer's bid might be invalidated and the car sold to the next-highest bidder.

    Budget

    • Everyone who bids on a car at auction should have a budget in mind. This applies to buyers in search of a single vehicle as well as used car dealers who use auctions to restock inventory by making multiple purchases in the same session. Setting a limit for each vehicle, along with a limit for the day, ensures that buyers will not get caught up in the emotion of the moment and bid more than a car is worth.

    Paying Fees

    • According to the Car Buying Tips website, the buyer's premiums that car auctions charge can significantly increase the price a winning bidder pays. These fees can range from a few hundred dollars up to 10 percent of the sale price, potentially adding thousands of dollars to the amount due. Bidders need to be prepared to pay these fees and should add a fee estimate into any price limits.

    Title

    • Drivers in most states need a vehicle title to register the car so it can be driven. Car auctions might provide the title on auction day or send it to winning bidders within days or weeks. Bidders should be sure they understand the title policy and not bid on a car that will be needed for daily use soon if there is a possibility of a long wait before they will receive the title.

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