Car auctions are a good place to pick up bargain vehicles. You can find ex-government vehicles, as well as used cars from fleet operators and finance companies. This guide will help you learn how auctions work and things to be aware of.
Buying a car at auction: What to expect
- 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.
- Auction cars often don't come with a statutory warranty.
- It's important that you thoroughly check the vehicle's state, looking at the condition report and service history of the car before buying.
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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 any 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, bring along a mechanic or knowledgeable friend. 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. Research the model you're after online. You can find out if the car has any common faults or failures, by looking through car forums and review sites. See outstanding product recalls, by visiting https://www.productsafety.gov.au/recalls.
- Expect to make a down payment. If you've bid successfully, you will generally need to make a deposit payment of about 10% or $500 at the end of the auction.
- Know the market value before you bid. This will give you a good idea of the vehicle's price before you start the auction. You'll need to research this before time, using sites like Red Book to get an estimate of the vehicle's worth.
- Try before you bid. If you're unfamiliar with car auctions, it's a good idea to attend a few before you buy anything, purely as an observer. They can be fast-paced and chaotic, so a good understanding of the process can help you keep cool and stay smart under pressure.
- Ask questions. If you have any questions or concerns about a vehicle, raise them before the auction, rather than after.
- 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.
- Make decisions with your head, not your heart. It's key that you set yourself a maximum bid limit and don't go beyond it. It helps if you can avoid getting too emotionally attached to a car or the situation. This way, you can walk away if the car gets too pricey.
How does the auction process work?
You'll find all kinds of vehicles at auction houses. There may be ex-police and government fleet cars, vehicles repossessed by finance companies and ex-fleet cars that are due for replacement. There are specialist auction houses 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 photo identification. The auctioneer will give you an identifying marker like a numbered card, or a paddle, which you 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 can bid on their own car to get it closer to 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 fails 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 matching 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 the vehicle's condition and history. 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 winning bid, so always check the car as thoroughly as possible beforehand.
If you know very little about cars, it can be a huge risk buying a car at auction. If you have a friend who is knowledgable about vehicles, or even better, works as a mechanic, ask them to come along. Just by starting the car, they'll be able to make a rough estimate as to the condition of the engine, which is the most expensive component to replace if it fails.
You can also attend car auctions online. These are very similar and provide information about vehicles such as distance driven, faults and their history. Keep in mind though, if the auctioneer allows inspections, they'll take place ahead of time, in specific time slots.
Find a mechanic for auctions
Try looking up pre-purchase vehicle inspection services. Many of the motoring organisations in Australia offer their own service. There are also independent companies operating in the sector. Another option would be to find a mechanic via sites like Airtasker.
Another simple way to find a mechanic to inspect a car at auction would be to find highly rated garages in the local area and call them. Tell them you're willing to pay for their time (likely, by the hour is going to work best) to come and inspect a car. You'll also have to accept that their assessment is only a general overview and implies no guarantee that the cars are mechanically sound.
The best thing to do is to download a detailed pre-purchase vehicle inspection checklist and make sure the car meets the minimum requirements.
How much do auctioneers charge to buy a car?
Although buying a car at an auction is often cheaper than purchasing one elsewhere, auction-related costs quickly add up. You will not only need to pay for the car itself, but also any outstanding registration and buyer fees.
These fees vary depending on the purchase price; some auction houses might charge a flat fee per item. For other vehicle categories, like commercial vehicles, you may pay a percentage of the final purchase value. You'll likely also have to pay a card payment processing charge and cash-handling fees. Things like after business hours collection are extra. Each day the car remains in storage, you'll have to pay an uncollected car fee. If you place bids over the Internet, there's a fee for that too. Some lots are subject to administration fees.
The exact charges vary between auction operators.
What financing options do I have if I buy a car at an auction?
You have the option of taking out an unsecured personal or used car loan (in the table 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.
- Look for any signs of a previous accident. Uneven panel gaps and wavy body lines are signs that the car has been repaired. Mismatched patches of paint (or even the surface texture, known as orange peel) also hint to a respray. Check inside the door sills, on the inside door bottoms and on the bulkhead of the engine to see if the car was previously painted another colour (to save money and time, a lot of people don't paint these when changing the car's colour).
- Check for any rust or corrosion as it may indicate more extensive damage. You can do this by tapping with your fingernail on paintwork, listening for any changes in tone. If you find somewhere that sounds dead or dull, it could be a sign of hidden body filler patches or subsurface corrosion.
- Examine for hail damage, dents and panel irregularities. Panels that jut out are a sign that someone has removed them in the past, or replaced them (or that the factory has very low-quality standards).
- Ensure that the door, windows and boot seals are intact. If they've broken down, rain will have worked into the interior. This could cause issues with mould, corrosion and the electronics.
- Look for chips or variations in the paint. Over time, stone chips can cause corrosion and paint flaking.
- Check the engine exterior for any damage. You need to get under the car to look at the sump, to see if it is dented or leaking. Oil leaks, missing components or cracks are all worry signs. Don't forget to examine the transmission too. This is harder on newer cars, which have more underbody trim panels for aerodynamic/fuel-efficiency improvements.
- Examine pipework for splits, tears or damage. Inspect the couplers too. Check rubber hoses and the exhaust for holes, splits or tears.
- Check the engine oil and radiator coolant levels. If the coolant is low, the car could have a damaged head gasket. If the oil is low, the owner might have skipped on servicing, neglecting the car. It may be burning oil, a sign that internal engine seals have failed. If you notice water in the oil, that's not good either.
- Inspect the tyres. A properly aligned car should wear the tyres evenly. If the tyres have worn more on the outside or inside edge, the alignment is out. If the rear tyre treads have worn smooth on a RWD (Rear Wheel Drive), the car may have been hooned. Cracks in the sidewall and flat spots on the treads are evidence of a car that's sat for a while. Cuts and slashes in the sidewall are dangerous and need replacing before driving.
- Check the condition of upholstery and interior panelling. Rips on seats are hard to repair. Broken plastics can be costly to replace.
- Look for any signs of wear and tear on the seatbelts. Frayed seatbelts are dangerous. Cut seatbelts indicate the car has been in an accident.
- Test whether the electronics, including dashboard lights, air conditioning, power windows and the audio system, are all functional. If the dashboard illuminates like a Christmas tree, walk away! If you have an OBD reader (these can be bought cheaply online), you can plug it into the car's ECU diagnostic port (if it has one) and read any error codes that arise as the car interrogates its own sensors during start-up.
Start the car, if possible
- Start the engine. Depending on the auctioneer's rules, start the engine, listening for any metallic grinding, pinging or rattling sounds. An engine should idle smoothly, if it's surging or sounds rough, it could point to a failure or lack of maintenance. If it's smoking, check the colour of the smoke. Blue smoke is the engine burning oil, pointing to internal seal failure or wear. White smoke is steam, meaning water or coolant is getting into the combustion chambers, again indicating an internal leak. Black smoke means the car is not fully combusting the fuel due to an incorrect fuel/air mixture, indicating there could be an electronics failure on newer models or leaky fuel injectors. Black smoke could also indicate a clogged Exhaust Gas Recirculator on diesels.
- Rev the engine. If the rev counter gets stuck in one place when revving, around 2,000rpm, then the turbocharger could be seized or the car might have entered into "limp mode". Limp mode is indicative of another problem and occurs when a sensor somewhere doesn't respond with valid data. This could mean there's a wiring problem, a faulty sensor, or even worse. If you hear squealing or grinding noises, bearings in the engine or on its ancillary components could have worn out.
- Check the lights all work
- Turn the steering from left to right and back again. Listen for knocks, feel for dead spots or clunks.
- PPSR certificate
- Transfer of ownership documents
- Registration papers
- Vehicle service history
This list is not comprehensive. You should have a look online for thorough car buying checklists.
Find Australian car auctions
How do you find car auctions in Australia? Google "car auctions [insert your area]" for a start. You can also check with the auction houses like Mannheim and Pickles, who list auction locations and dates prominently on their site.
If you're looking especially for classic, modified, motorsport and vintage cars, check out Shannons.
A word of warning, scrolling through car auctions can be seriously addictive. You'll also find stuff you've never seen before. Like a ten-seater electric golf cart for sale at Mannheim!
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