Tips and Traps When Buying a Used Car at Auction

February 28, 2020

For many bargain hunters out there, no word is as exciting as the word “auction.” When it comes to buying used cars at an auction, is there such thing as a good deal?


Jeff Huang, remarketing sales supervisor at Westlake Financial Services, is 100% sure that buyers will find good deals. The catch, however, is understanding that car auctions exist because there are cars that did not sell elsewhere, for whatever reason. Many of the vehicles cannot be test-driven, there's little time allotted for inspection, and the bidding process is something tempestuous.


What it boils down to, Reina says, is defining the risk you're willing to take against the potential savings.


What to do?


Choose the right auction.

Online auctions, like eBay Motors, can once in a while have great bargains, but the best ones can be found at brick-and-mortar auctions. So, instead of paying a dealer $12,000 for a 2013 Ford Edge with 90,000 miles, you might snag one at an auction for $7,000, according to a Kelley Blue Book study. Search for “open” or “public” auctions that don’t require a dealer’s license. There are specific auctions that sell police cars, pickups, or government-issued vehicles.


Attending public auctions are typically free, but if you plan on bidding, Reina says, you might have to pay a nominal fee. In most cases, auctions take cash or cashier’s checks and require an immediate deposit and full payment within 24 hours. Some auctions that take credit cards will add as much as a 5% fee for this service.


Watch before you bid.


After finding a local auction, watch a few of them first and then get a feel on how their auctions are run. Get acquainted with how fast the vehicles move across the auction block. Larger auctions with bigger lots may have multiple lanes of vehicles in constant motion.


Assess the risk.

Do your research and find out if there are any guarantees included in the car. This “stoplight” system can help you better assess your risk.


Greenlight - Vehicle has no known defects, and arbitration is available to deal with undiscovered mechanical issues.

Yellow light - Vehicle has known issues not subject to arbitration.

Red light - Vehicle is sold as-is.


Inspect and verify.


Typically, cars can be inspected, but many auctions don't allow you to test drive a vehicle. All you can do is sit in the car, start it, and get a feel on how the engine runs. When bidding online, you'll usually see a “condition grade,” which is a 1 to 5 scale with 5 being new and 3 being normal wear and tear. Sometimes there's also a detailed list of blemishes and mechanical defects.


Bring a friend.

Have a car-savvy friend or a trusted mechanic? Take them with you to the auction. Whoever you decide to bring, let them know what you're looking for and what your budget is. They're there with you to keep you from getting too excited.


Cast a wide net.


Be open-minded, and don't fixate your mind on one specific car. Review the “run list” the day before attending an auction to know what vehicles will be on sale.


Set a bidding range.


Once you’ve found the perfect vehicles, check the cars' trade-in value on or Kelley Blue Book. Don't bid over the trade-in value.


What not to do




Don't fall victim to the "red mist" syndrome. Stay cool, calm, and collected. Don't overbid and stick to your limit, even when the auctioneer is staring at you.


Poor signaling.


Don't get distracted, especially when you're in an auction with multiple car lanes. Make eye contact with the auctioneer to let them know you're interested in bidding. Remember, you don't have all the time in the world to decide. For the most part, you only have a few seconds.


Bidding against a shill.


Huang says some dealers will bid on their cars to increase their value. Be extra careful when bidding, and always stick to your limit.


Buying a lemon.


Assuming the vehicle history report is clean, it’s in your hands to ensure to check for mechanical defects or body damage. Create a checklist and completely inspect the car.