Finance Blog
Going once, twice, three times…sold: Buying a car at auction
Posted on 29 June 2016
Buying a car at auction can appear to be a fast track to a great deal. But as with everything in life, it’s important to remember that if something looks too good to be true it’s usually because it is.
Buying at auction requires an eyes wide open approach: here are the important things to be aware of before you place a bid.
Choosing your car
Many auction houses produce catalogues of the cars that they have available for sale. This is a great starting point to review what’s available and sense check values online to see what you can afford.
If you find a car that suits your needs in advance of the car auction date, it may be possible to get it checked by a mechanic or take it for a test drive. This is ideal because buying based on a visual inspection alone can be a high risk strategy.
If you are able to organise for an expert to inspect the car, you’ll probably have to do it on site. Check with your preferred mechanic in advance of phoning the auctioneer to book an appointment - they need to be willing to travel and you need to be aware of any costs involved.
A visual inspection
If you find that you’re limited to a visual inspection and you don’t have expert help, it’s important to be realistic about your own limitations. Buying at a car auction could set you up for lots of mechanical bills if you don’t know what you’re getting yourself into.
Completing a visual inspection can help you to spot some but not all of the problems with a car. Keep a special look out for signs that work has been done on the car: this could be masking bigger issues. Look out for: paint overspray; panels that appear to be uneven; puddles or liquid under the vehicle; scored brake discs; the car not sitting evenly on its wheels; or any other signs of work.
It’s important to use your nose and hands as part of the inspection: they can sometimes uncover problems that your eyes may not spot. Run your hands over seats and carpets to ensure there is no wetness from an exterior leak: make sure there isn’t a musty or damp smell.
The Vehicle Identification Number (VIN) is an important guide to the car being intact. Often major work will require the replacement of parts like the engines or doors and you may find the VIN doesn’t match. Look in particular at the base of the windscreen, engine, doors and in the boot to see if you can find the VIN and if it matches across the vehicle.
Plan your finances
An auction bid is an unconditional offer, so before you begin the bidding process it’s important to have the details of your finance organised. Most auctioneers will require a payment on the same day.
If you’re considering buying at auction, give us a call today. Setting up your finance will help you understand what you can and can’t afford, and can help you to ensure that you don’t over-extend yourself by getting carried away with bidding.
Auction time
Taking part in a car auction can be an exciting experience, but it’s important that you don’t get too swept up in the process. Try and visit a few car auctions before you go to the one you’re going to bid at. Familiarise yourself with the proceedings and get a copy of the terms and conditions in advance.
When you register as a bidder, you’ll probably be asked to agree to the terms and conditions of the auction. It’s important to be sure of what you’re signing before you begin bidding.
The terms and conditions will also let you know of any fees or charges that the auctioneer might add to your cost of sale. This is often referred to as a buyer’s premium or buyer’s commission and is added on after the bidding process is complete.
Get bidding
Once you have confirmed your finance, checked out your car and signed up as a bidder: it’s time to get bidding. Remember to set yourself limits for your purchase based upon the finance you have available and what the car is actually worth.
Buying a car at auction can be a risky business, but some upfront research can help you to ensure that you get the deal you are looking for. Take every opportunity you can to inspect the car and sense check its value prior to auction, and familiarise yourself with the car auction process so you avoid any surprises. Contact us today and we’ll be happy to help you set up your finance so you can make your purchase as cost effective as possible.
If you’re getting ready to go car shopping and would like to talk about your car loan options, give the team at Online Car Loans a call on 0800 88 2000. We’ve helped thousands of Kiwis get on the road by providing them with a car loan that works with their budget.
Please note, this article does not represent personal financial advice.