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Car auctions are a method of buying a used vehicle that often gets overlooked – sometimes for good reason. Going to car auctions can be an adventure, and some buyers find it very rewarding. A successful day at the auctions can yield a decent car at a very low price. However, there are a lot of ways for the deal to turn sour, too.

The worst-case scenario isn’t that you’ll walk away from an auction empty-handed; it’s that you’ll unknowingly drive away in a death trap. If anything discussed in this overview makes you uneasy, buying a car at an auction is probably not the best choice for you.

How to Prepare

A lot of car auctions are only available to licensed car dealers, but you can look online and in your local newspaper to find public auctions near you. If the auction publishes a list of vehicles ahead of time, identify a few likely candidates and do a search with whatever information is provided (like looking up the car’s value, or even a car history report if you have the VINs).

Most auctions are full of cars that come from municipal impound lots – auctions often feature cars that have been towed, abandoned, or seized. In most cases, these aren’t going to be the most appealing, safest, or well-maintained vehicles, but there can be some gems that would otherwise go overlooked. Other possibilities include former rental cars or other types of fleet vehicles (like corporate cars or decommissioned police cars).

Stay calm on auction day. It’s easy to get excited or overwhelmed; there’s a lot going on. If you can, visit an auction before the day you actually plan to bid to get familiar with the process as well as the idea of bidding. Experts recommend getting there early and checking out the lot. If you don’t know much about cars, bring a friend who does. Find the cleanest cars you can and take notes on cars you’re interested in – if these turn out to be some of the same cars you researched beforehand, you’re off to a good start. Some auctions will even let you test-drive cars you like.

Benefits

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The main benefit of an auction, of course, is that cars, even decent ones, usually end up costing much less than they would at a dealership or from a private party sale. However, unless you’re adventurous, enjoy taking chances, or generally perform well under pressure, the cost savings might be the only benefit.

Some auctions are more consumer-friendly than others, which can be a big benefit if you’re lucky enough to live near one. While most auctions don’t allow returns or guarantee a car’s condition (more on that later), some offer limited recourse for a bad car under certain conditions. Check out the rules beforehand, and if you can, stick to auctions that offer these perks. Auction cars might not sound all that appealing, but you could end up getting lucky. The day might even be fun.

Drawbacks

There’s no federal law in the United States that requires sellers to disclose flaws, damage, or outstanding recalls on used cars. That means that in most auctions, the cars are sold as-is, even if it turns out there’s something seriously wrong with the car you end up buying. Some states have laws about the sale of used cars, but they’re often specifically aimed at licensed dealers and can be hard to enforce in an auction situation when the buyer has agreed to the terms. On the upside, if you buy a car that has outstanding safety recalls, you can take it to your local dealership for that brand, and they are required by law to perform the recall work for free.

An auction isn’t the place for picky shoppers. The goal is to buy the best car you can find at a bargain price, which means that you’ll probably have to put aside preferences such as make, model, and year. Indulging in more superficial concerns, such as holding out for a specific color, will almost ensure you go home empty-handed.

Finally, many auctions require buyers to pay in cash, which should be disclosed up front on the auction’s website or newspaper ad. Traditional financing isn’t an option here, and you probably won’t be able to put the purchase on a credit card, either. Getting ahold of that much cash can be difficult for customers who are shopping the auctions because those are the only cars they can afford, but there is a bright side: there’s no temptation to over-bid.

A Note About Collector Car Auctions

Readers have probably figured out by now that we’re not talking about classic car auctions — the Sotheby’s, Mecums, and Barrett-Jacksons of the world. But, if that’s what brought you here, the principles are the same: do your research and keep your cool. Fortunately, these auction companies make the process a little easier for their big-spending customers. The vehicles to be auctioned are published well ahead of time and are accompanied by some background information. Some auction houses even offer expert advice on-site. These high-profile, high-priced events are a culture unto themselves and are worthy of more in-depth research, but they’re not where you’d go to find a mainstream, late-model car.

Other Things to Remember

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The excitement and high-pressure environment of an auction can work to your disadvantage in other ways. Don’t let yourself get lulled into a false sense of security by watching others bid and buy.

If an auction doesn’t let you check out a car’s VIN before bidding, reconsider buying there. Auctions are an easy way to move around cars with shady histories, and no matter where you’re buying your car, you want to know its background. Without a VIN check, you have no way of knowing if the car has been flooded, has had its odometer rolled back, has been salvaged and rebuilt, or has suffered any other number of unscrupulous but common practices.

Keep in mind, too, that even if you’re not buying cars at auction, others are, and that includes dealerships. Many used car dealerships scour auctions for cars they can buy low and sell high. So keep in mind that if you decide auctions aren’t right for you, that doesn’t mean you’re free and clear of the drawbacks that can come with an auction car.

Avoid salvage auctions entirely. Unless you’re a serious automotive hobbyist, nothing you’d find there is worth buying, and then it’s only suitable for tinkering. It’s definitely not a place to find a safe, reliable commuter car.

More Tools From U.S. News & World Report

Interested in going to an auction to find your next used car? Check out our used car rankings to compare vehicles and find the ones you like best. If you’ve decided to go the more traditional route for your next vehicle, check our used car listings to see what’s available in your area.