6 Steps to Buying a Car at Auction

Since the late 90′s, I have bought every car I’ve owned at auction. I’ve owned 2 BMWs (a 325is was my first one back in ’98, then an M3 a few years later which I can’t find a picture of), a Porsche Boxster, and a Mercedes CLK 320 Cabriolet. I have been mostly happy with my experiences, with the exception of the Boxster (which I will explain below). I have generally saved about 20% off of what I would have paid in a private party transaction. Don’t be fooled by all of the sites that tell you that you will pay pennies on the dollar, it’s simply not the case. However, if you can save 20% (,000 on a ,000 car!) it’s definitely worth the time and the effort.

I have always gone to live auctions as opposed to buying online via e-bay or other sites. I like to see what I’m getting, plus then I don’t need to wire tens of thousands of dollars to somebody I’ve never met. I’m sure that online auctions are fine for many people, but I prefer the live auction route.

Here are the things you need to remember:

Figure out exactly what you want. Don’t ever go to an auction to just “look for a car.” I always narrow my car choices to 1 or 2 models, then allow some flexibility with the model year. This leads me to the issue of my Boxster… I originally wanted a Boxster S, but instead I bought a plain old Boxster, which was really underpowered and somewhat of a disappointment. Make sure you know what you want, and what concessions you are willing to make before you go to the auction. Be patient. It’s going to take you a while to find the car that you want (i.e. weeks or months) so be prepared for that. You will need to do ongoing research (more below) during your spare time until you find your car.

Have your money lined up. At auction, you will need to provide a cash equivalent (i.e. cashiers check). The problem is, you can’t get a car loan at an auction like you can with a dealership and you can’t run down to your local credit union during a transaction. What I’ve done in the past is taken a home equity line, which has been a great strategy because (a) you get lower interest rates, (b) your interest is tax deductible and ( c) you can get much lower payments.

Prepare. Do lots of research, and be prepared to pay a couple of hundred bucks for good information. You are going to need to research two things: auction locations and car availability, and once you find cars you will need to research individual VIN numbers. I’ve found that the best research sites usually charge a fee, but spending a couple of hundred dollars up front is an incidental cost if you’re going to spend ,000-,000.

Research auctions. There are hundreds, if not thousands of sites on the internet that promise auction cars for pennies on the dollar. As I mentioned before, don’t get suckered into that thinking, you probably aren’t going to save more than 20% unless you get really lucky. Start with free, government sites. You can find these by doing a specialized google search (under “advanced options” on the search page, look toward the bottom and there will be an option so search U.S. government sites).

Finding non-government surplus auctions and others that are open to the general public (without an auto dealers license) is a little trickier. I use pay sites because I haven’t found any comprehensive free sources. There are two pay sites that I use, but only one that I would recommend because the other one only has information for a few of the larger police auctions. Mind you, the one below has all of the exaggerated marketing claims (i.e. 95% off retail) but it actually provides some great information if you can get past the fluff:

Federal, State and Municipal Auctions

Research cars. Once you register for an auction you can get the VIN numbers of the available cars and start researching them. Years ago you had to pay for individual carfax reports, but now they have blanket programs that allow you to look at multiple VINs for one flat fee. In my opinion, this one is the best:

AutoCheck® Vehicle History Reports from Experían Automotive.

Remember that this part is critical. Almost all auctions are “buyer beware”, and there are lots of cars floating around with title issues. Do not buy a car with any kind of title problem. Ever. There are thousands of cars that were flood damaged in Hurricane Katrina that are popping up on the used and auction markets, so look out.

If you do enough preparation, you will very likely find the car you want within a couple of months. Good luck!