Repossessed Cars Auctions
HOW TO BUY
REPOSSESSED CARS AT AUCTIONS
Find Seized Cars For Sale Buy Repossessed Cars At Auction
A record number of cars were repossessed by banks and loan companies in 2008. The repo car numbers up 12 percent. A staggering number over 1.5 million, can make anyone’s head spin. The numbers don’t look to be decreasing at this point in 2009, as layoffs mount and more car owners are unable to keep up with their payments. So, this leaves millions of cars that need to be sold for a loss to the bank, and the car owners.
It is a sad fact that so many individuals are having difficulty, with finances, but it is reality of life. Research shows that most people buy new cars that are beyond their means. The luxury cars, a big house, and high dollars spent on entertainment are the American way. However, a down economy, and living off credit cards that are maxed, has many people unable to meet their monthly expenses.
Government Repossessed Cars For Sale
These repo cars will go to car auctions where they will be sold at large discount to book value. Some auction houses clearing 1,200 or more cars a day. This creates amazing buying opportunities for individuals, used car dealers, and professional car traders to scout prime deals on all makes and models of cars available at auction.
Repossessed Cars for Sale – Repo Car Auctions
by Al Hearn
What is a repossessed (repo) car?
When a car owner fails to make on-time loan or lease payments, the bank or finance company will repossess the vehicle — take it back. Typically, the buyer will be given a chance to catch up on payments or be made a payoff offer to recover the vehicle. If the buyer does not or can not get the vehicle back, the bank or lending institution takes it over and will sell it to recover some or all of the loan balance.
Repossessed cars are not the same as seized cars, impound cars, or unclaimed cars typically sold by police or government agencies. Repossessed cars belong to banks, credit unions, and finance companies.
Some smaller banks or credit unions may display repo cars in their own parking lots, with “for sale” signs in the window. These cars can be easily spotted when driving by the bank.
Most banks and finance companies hand over repo cars to a professional auction company . When the auction company sells the car, the bank gets the money, less a commission. Auctions can be public, private, or dealer-only auctions. Repossessed car auctions are sometimes mistakenly called “car foreclosure auctions.”
When a bank or loan company sells repossessed cars, it wants to recover enough money to pay off the existing loan balance, plus any expenses for towing and storage and the fees of the professional repo company who picked up the vehicle.
How do I find repo vehicle auctions?
There are number of ways to find repossessed car auctions.
One way is to simply calls banks and credit unions in your area and ask how they sell their repo cars. If it’s an auction company, they can give you information to locate the company so that you can ask about locations, rules, and schedules.
Another way is to call local newspapers and ask when they publish car auction announcements. There is usually one one newspaper in an area that prints car auction announcements on a specific schedule, say, on the third Friday every month, as an example.
What to pay for repo cars?
Bargain prices are very possible for repo cars, but not always. Banks are willing to take losses on the sale of repo cars but they prefer not to do so, if possible.
In cases where the borrower was not upside down on his loan, the bank may seek to only recover what was owed, which could be much less than the car is actually worth — a real bargain. These are the deals to look for.
In other cases, which is more common, the borrower was upside down on his loan, which means he owed more than the car is worth. Obviously, the bank would like to recover the entire amount owed, but will usually price the car at fair market value if it’s selling the vehicles from its parking lot. However, if selling at auction, they will accept the selling price, whatever that may be. Either way, the bank will usually incur a loss.
If you attend a repo car auction, makes sure you know the value of the cars you bid on. Take a couple of used-car price books with you. Don’t get caught up in the excitement of bidding and overpay.
What kind of cars at repo auctions?
There are generally three kinds of cars at repossessed vehicle auctions.
Almost new cars in new-perfect condition and with low mileage. The borrower may have just lost his job, had a divorce, or otherwise realized he couldn’t afford the car. Bargains can be found on vehicles on which the borrower had made a large down payment, took advantage of rebates, or traded another vehicle.
Late model cars in average condition and average miles. The borrower may have had serious financial troubles, or a bankruptcy, that made it impossible to keep her car. Many of these vehicles are available for less than market value, especially if the loan was near being paid off.
Older model cars in poor condition and high mileage. The borrower may have been financially challenged when he bought the car and things became worse, which caused multiple missed payments – which resulted in a repossession. Many of these cars may have hidden problems, which might be part of the reason for the borrower’s default. Such vehicles should be inspected by a mechanic, if possible, before purchase.
How to get bargain prices on repo cars
If you find a bank selling it’s own repossessed cars, determine the actual value of the car you’re interested in by consulting Kelley Blue Book (www.kbb.com) and NADA Guides (www.nadaguides.com).
If the bank’s price is higher than the “book value”, negotiate with them to lower the price. If the price is already lower, you’ve possibly found a good deal.
If you attend a repo car auction, go early and inspect the cars you might be interested in. You can usually look over the cars and even start them up, but you won’t be able to drive them. Get a CARFAX vehicle history report to make sure your aren’t getting a car that has been wrecked or rebuilt, or that has a salvage title.
Take your used-car price guide books with you so that you’ll know what the cars are worth. Bid wisely and follow auction rules. Here is a site with a free auction guide.
It’s possible to get some great bargains at repo car auctions. Be prepared to pay for your winnings, or be able to show approved financing.
Summary
Repossessed car auctions can be a source of good used vehicles at great prices, if you know what you’re doing and don’t mind taking a little risk.
Repo cars are a great source of bargains, created by the misfortunes of people who have had financial difficulties.
About the AuthorAl Hearn writes and publishes web sites for automotive consumers
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