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9 Disadvantages of Buying a Car from an Auction

Disadvantages of Buying a Car from an Auction

I’ve been tempted by the idea of buying a car from an auction.

Auctions look like a fun and exciting way to purchase a car. Many vehicles at auctions are the result of repossessions or de-fleeting.

Some only require a bit of elbow grease to become road worthy. While others need a complete overhaul. You’ve heard the phrase: you can’t judge a book by its cover.

But that’s just what you’re doing at auction because there’s no way of telling what you’re really buying just by looking.

If your used to buying from auctions, however. Then hey, go for it!

But if you’re not, below are some considerations to help you decide if this is the right option for you.

1. You Can’t Go for a Test Drive

One Disadvantage of Buying a Car from Auction Is That You Can’t Go for a Test Drive

A test drive gives you a first-hand experience of what you can expect from ownership.

You get to feel how the car handles and (most importantly) you’ll be able to shake out any obvious issues which you can work into negotiating the sale’s price.

An auction eliminates this option. Automatically, this dramatically elevates the inherent risk of buying a car at auction.

2. No Way to Know If You’re Overbidding

The Second Disadvantage of Buying a Car From an Auction House Is That There's No Way to Know If You’re Overbidding.

If your familiar with the way things work at auction houses, then this likely isn’t a big deal for you.

But if you’re not, how do you know you’re not overbidding on the car you’re competing for?

I suppose you could study up on how much the car you want to bid on usually goes for in the used car market at various conditions.

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But that’s just it.

How can you intelligently formulate a price ceiling when you have no idea about the condition of the car?

3. Mysterious Vehicle History

The Third Disadvantage to Buying a Car from Auction is That the Vehicle History Will Remain a Mystery to You Until You Win the Auction.

If buying a used car makes you nervous with all the resources available to you like CarFax and pre-purchase inspection.

Then the auction block is no place for you to buy a car.

At least when you’re buying a car from a private seller you get the luxury of asking probing questions to get more detail about a vehicle’s background.

4. Might Need a Tow Home

The Fourth Disadvantage to Buying a Car from Auction Is That Since You Don't Know the Vehicle's History, You Might Need a Tow Home.

And since there’s no way to find out about the vehicle’s history (likely until after you’ve made the purchase).

You also have no idea what condition it will be in to drive home, even if you saw the car being driven around at auction.

5. No Warranties

The Fifth Disadvantage of Buying a Car from Auction is That There Are No Warranties.

You know how some used cars come with extended warranties?

This feature is especially useful when buying high-priced luxury cars like Mercedes and BMWs where repair bills for components that won’t even cause you to bat an eye on other cars can be eye watering.

I’ve never heard of car auctions offering warranties on any car.

Every automobile I’ve seen at auction is an as-is sale, which means you’re totally on your own for whatever happens to the car after you win the auction.

6. You Have to Deal with Third Parties

The Sixth Disadvantage of Buying a Vehicle from an Auction is That You Have to Deal with Third Parties.

No matter what you’re buying from an auction, you’ll do well to have a good idea of the vendors they work with.

Many times, they won’t be the cheapest. But you’ll nevertheless be stuck working with them after you win the auction.

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Copart sued Auto Auction Services Corp. for an allegedly demanding outrageous fees to the tune of $6.6 million dollars in an effort to restrain competition.

Why does this matter to you? Because whatever’s going on behind the scenes gets passed on to you which affects the final price of the car you’re bidding on.  

7. Mind the Reserve Price

The Seventh Disadvantage of Buying a Vehicle from an Auction is That You're Not Getting Your Vehicle If the Reserve Price Isn't Met.

A reserve price is the minimum amount a seller is willing to let go of an item for at auction. And if that price isn’t met, they’re under no obligation to sell that item.

That means if you have the winning bid for a car at auction, but it doesn’t at least meet the seller’s reserve price.

The seller is under no obligation to sell the car to you – I’ve witnessed this happen.

8. The Hammer Price is Not the Final Price

Another Disadvantage of Buying a Vehicle from an Auction is That the Hammer Price is Not the Final Price.

But let’s suppose you have the winning bid, and it met the seller’s reserve price.

Before you fall in love with a car at auction you should probably know that though that while the hammer price is the one that gets all the fanfare.

Behind the scenes at an auction there are fees associated with getting the winning bid, which means the car could end up costing you more than you bargained for.

9. Your Car Might Be Hot

The Final Disadvantage of Buying a Vehicle from an Auction is That Your Car Might Be Hot.

Saw this one on an episode of Full House when Joey bought a Pontiac Firebird for D.J.

There’s nothing quite like the fear of driving home in a car you just purchased only to have flashing red and blue lights creep up behind you with a booming voice asking you to pull over.

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Again, you don’t know the history of the car you’re bidding on or the conditions under which the previous owner had it in their possession. Scary, but it happens.

Sources:

Captialone.com; Courthousenews.com; Investopedia.com; Bidgarage.com