car-auction

How to buy a car at auction

Get a bargain on the car you want at vehicle auctions.

Car auctions are a good place to pick up bargain vehicles. You can find ex-government vehicles and used cars from fleet operators and finance companies, but there are some key differences to be aware of.

You bid on vehicles against other buyers rather than directly negotiating with the seller, there are no refunds if you change your mind after purchase, and the auction cars often don’t come with a statutory warranty. It’s important that you thoroughly check the condition of the car before buying.

This guide will take you through what you need to know about buying a car at an auction.

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Rates last updated November 19th, 2017
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Bank Australia Car Loan
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Tips for buying a car at auction

  • Check the car’s certifications before buying. Some vehicles might be sold with a certificate of roadworthiness (pink slip), while others may not. You should add the cost of registration and repairs to the cost of the vehicle for an idea of total expenses.
  • Inspect the vehicle thoroughly. If you don’t know enough about cars to inspect it properly it’ll be worth bringing along someone who does. Cars sold at auction don’t necessarily have the same guarantees as those sold in dealerships and there are no refunds. It is your responsibility to make sure the car is in good condition.
  • Expect to make a down payment. If you’ve bid successfully you will generally need to make a payment of about 10% or $500 at the end of the auction.
  • Consider market value before you bid. This will give you a good idea of the vehicle’s price before you start the auction.
  • Try before you bid. If you’re unfamiliar with car auctions it can help to attend a few first without buying anything. They can be fast paced, so a good understanding of the processes can help you bid smarter.
  • Ask questions. If you have any questions or concerns about a vehicle, raise them before the auction rather than after it commences.
  • Know the competition. It can help to know whether you’re bidding against dealers or the general public. Dealers tend to look for the discounts and usually avoid bidding too high, making it easier to get a bargain.

How does the auction process work?

Auction houses access used cars from a variety of sources, such as ex-police or government cars, cars repossessed by finance companies and ex-fleet cars that are due for replacement. You can find auctions that only deal with specific types of vehicles like classic cars, as well as more general auctions.

Here’s what to expect on auction day:

  • You must register with the auctioneer before the auction commences and you need to provide identification. The auctioneer will give you an identifying marker like a numbered car or paddle which you can then use to make bids.
  • The reserve price is a figure set by the seller before the auction. This is the lowest bid that will be accepted. If no bid reaches the reserve price, the seller can choose not to sell the car, but if a bid is above the reserve price, the seller must accept it. Before bidding reaches the reserve price, sellers are able to bid on their own car to raise the reserve price. The auctioneer will announce that a car has a reserve price when bidding reaches the reserve and whenever there is a vendor bid to increase the reserve price.
  • If a car failed to reach the reserve price you can get the seller’s details from the auctioneer to negotiate with them directly.
  • If you have the highest bid at or above the reserve price, you are required to complete the sale.

What should I keep in mind?

You will generally have time to inspect the cars you’re interested in before the auction begins. Check for damage as extensively as you are able to and confirm its warranty and licensing. Some auction houses will let you start a car’s engine before buying, but none allow test drives. Remember, there is no going back after a successful bid so always check the car as thoroughly as possible.

You can also attend car auctions online. These are very similar, and provide information about vehicles such as distance driven, flaws and their history. Keep in mind you cannot inspect the cars before buying.

What financing options do I have if I buy a car at an auction?

Although buying a car at an auction is often cheaper than getting one elsewhere, the costs can be unpredictable. You will not only need to pay for the car itself, but also any outstanding warranty and registration.

You have the option of taking out an unsecured personal or used car loan (on the page above) or opting for a financing option direct from the auction house.

If you opt for a standard car loan you may want to consider pre-approval so you know how much you have to spend. Consider the costs of registration and any repairs that may be needed when comparing your options and applying for a loan amount.

How do I inspect the vehicle?

Always give the car a thorough inspection before buying. Try following this checklist to make it easier.

  • Check the exterior

  • Look for any signs of a previous accident
  • Check for any rust or corrosion as it may indicate more extensive damage
  • Examine for hail damage, dents and panel irregularities
  • Ensure that the door and boot seals are intact
  • Look for chips or variations in the paint
  • Check the engine exterior for any damage or abnormalities
  • Check the engine oil and radiator coolant
  • Go over the interior

  • Check the condition of upholstery and interior panelling
  • Look for any signs of wear and tear on the seatbelts
  • Find out whether the electronics, including air conditioning, power windows and the audio system, are functional
  • Start the car, if possible

  • Check for functioning of interior lights and all exterior lights
  • See that dials and electronics such as air conditioning and audio are working as expected
  • Listen for unusual engine noises
  • Check the documentation

  • PPSR certificate
  • Transfer of ownership documents
  • Registration papers

Picture: Shutterstock

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