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6 Things You Need to Know When Buying a Car at Auction

Learn how to navigate the auction environment with confidence and maximise your chances of securing a great car deal.
Published on November 26th, 2020
  Written by 
Adrian Edlington
Adrian Edlington is PR & Communications Manager at Savvy. With a keen interest in personal finance, car loans, the mortgage industry, cost of living pressures, electric vehicles and renewable technology, Adrian's research includes conducting primary data surveys and analysis of up-to-the-minute secondary Australian data sources. His work on behalf of Savvy has been featured on ABC.net.au The Conversation, the Sydney Morning Herald, AFR, News.com.au, The Age, Herald Sun, Adelaide Now, SBS On The Money, 7News, Car Expert, Which Car, Drive.com.au and more. In his spare time, Adrian enjoys mountain biking and business podcasts.
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Bill Tsouvalas

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Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Are you considering purchasing a car at auction? Whether you're a seasoned bidder or a first-time attendee, buying a car at auction can be an exhilarating experience. However, it's essential to be well-prepared and informed to ensure a successful purchase. In this blog, we'll delve into six crucial factors you need to know when buying a car at auction.

1. Do your research

Before diving into the world of car auctions, it's crucial to conduct thorough research. Start by exploring different auction houses and understanding their reputations. Look for reviews and testimonials from previous buyers to gauge their credibility and reliability. Additionally, familiarise yourself with the types of vehicles typically available at each auction to ensure they align with your preferences and budget. Common types of cars you may find at auctions include:

  • Used cars: the majority of vehicles sold at auctions are used cars, ranging from economy models to luxury vehicles.
  • Fleet vehicles: previously owned by rental companies or corporate fleets, often well-maintained with lower mileage.
  • Repossessed vehicles: cars taken back from borrowers who defaulted on loans, sold to recoup debt, varying in condition.
  • Salvage vehicles: vehicles damaged by accidents or natural disasters, sold for parts or restoration projects.
  • Classic and collector cars: some auctions specialise in vintage, rare or limited-edition automobiles, attracting enthusiasts and collectors.

Researching the market value of the cars you’re interested in is also essential. Use online resources and tools to determine the fair market value based on factors such as make, model, year, mileage and condition. Armed with this knowledge, you'll be better equipped to set realistic expectations and make informed bidding decisions.

2. Understand the process

Each auction house operates differently, so it's essential to understand the specific procedures and protocols of the auction you plan to attend.

  • Register for the auction: most auction houses offer online registration, though others may allow in-person registration. You will typically need to provide information and a valid ID, and there may also be registration fees.
  • Unreserved vs. reserved auctions: unreserved auctions have no minimum price set by the seller, while reserved auctions have a minimum reserve price the car needs to reach to be sold. Unreserved auctions offer the potential for bigger bargains, but also carry a higher risk of intense competition driving up the price.
  • Know how to bid: decide on your bidding strategy. Practise confident bidding signals (raising a paddle, hand gesture) and avoid large jumps in bids that might scare away other bidders.
  • Learn the terms: familiarise yourself with terms like “hammer price” (final winning bid), “buyer's premium” (additional auction fee) and “reserve not met” (car not sold because bidding didn't reach the reserve) to navigate the auction language with ease.

3. Check and inspect the car

In most cases you will not be able to test drive a car sold via auction but you should have the opportunity to inspect the vehicle. You should:

  • Examine the car: take advantage of pre-purchase inspections and check the exterior and interior for any signs of damage, wear or rust. Look closely at the body panels, paintwork and trim for any discrepancies or inconsistencies.
  • Review the paperwork: don't neglect documentation. Review the car's registration papers, service history (if available) and any other documentation provided by the auction house. This paperwork can reveal valuable information about the car's ownership and condition.
  • Get a PPSR or car history report: consider obtaining a PPSR (Personal Property Securities Register) report or a car history report from a reputable provider. These reports can offer valuable insights beyond what the auction house might disclose.

4. Set a budget – and stick to it

Setting a budget is essential when buying a car at auction to avoid overspending or getting caught up in bidding wars. Determine your maximum bid amount based on the car's value, your budget constraints and any additional costs you may incur. It’s important to factor in:

  • Potential repair costs or upgrades the car may need after purchase.
  • Auction fees, such as buyer’s premiums, registration fees and administrative fees.
  • The down payment, which might be a set amount or a percentage of the final price of the car.
  • Transportation costs, if you need to have the car moved from the auction site to your location.

Be disciplined and stick to your budget, even if the bidding exceeds your expectations. Remember that there will always be other opportunities, and it's better to walk away than to overextend yourself financially.

5. Know your rights and responsibilities

Winning the bid doesn't end your involvement. Here's what you need to be aware of:

  • Payment methods: confirm the auction house's accepted payment methods (cash, cheque, EFTPOS) and ensure you have the necessary funds readily available to cover the full purchase price and any auction fees.
  • Post-auction logistics: Consider how you'll transport the car after winning the bid (driving it yourself, arranging transport). You will also need to register the car in your name.
  • “As is” sales: auction cars are typically sold “as is”, meaning there's no guarantee of perfect condition and you might face unexpected repairs. Factor this into your decision-making process.
  • Warranties: unlike car dealerships that often provide warranties on used cars, warranties are typically not offered at auctions. 
  • Auction return policy: unlike regular car dealerships, most car auctions operate on a “buyer beware” principle, with no cooling-off period. However, some auction houses might offer limited return windows or dispute resolution mechanisms in specific circumstances. It's essential to clarify these details beforehand.
  • Consumer guarantees: Australian consumer law provides certain guarantees for consumers, even in “as is” sales, including that goods must be of acceptable quality, fit for purpose and free from undisclosed defects. If the car you purchased at auction has a major fault that wasn't disclosed, you might have recourse under these consumer guarantees.

6. Manage your expectations

Auctions offer a chance at great deals, but come with inherent risks. Here’s what to keep in mind:

  • Imperfections are likely: unlike a dealership purchase, auction cars often have imperfections or require repairs. Be prepared for potential costs beyond the purchase price.
  • Fast-paced and competitive: auctions are a dynamic environment where bidding can move quickly and competition can be fierce. Stay calm, focused and stick to your plan to avoid making impulsive decisions.

Is it worth buying a car at auction?

Whether you should buy a car at auction depends on your preferences and circumstances. Advantages of buying at auction include:

  • Potential savings: auctions offer the possibility of finding cars at a lower price compared to dealerships or private sellers.
  • Wide variety: auctions offer a diverse range of vehicles, from everyday sedans to luxury cars.
  • Transparent process: bidding at auctions is generally a transparent process. You can see the current bid price and make informed decisions based on your budget.

However, there are some potential drawbacks to the process:

  • “As is” sales: at auction, you buy the car in its current condition, with no warranties or guarantees. The responsibility for any existing or future repairs falls on you.
  • Limited inspections: while pre-purchase inspections are encouraged, test drives are uncommon at auctions. You'll need to rely on your inspection skills or hire a mechanic to assess the car's condition thoroughly.
  • No cooling-off period: unlike some car sales, there's no cooling-off period after winning a bid at an auction. The purchase is final once you settle the payment.

Here are some additional factors to consider:

Your mechanical knowledge: if you’re comfortable with cars, understand the mechanics and can perform basic inspections, auctions might be a good option. However, for those less mechanically inclined, an auction might expose them to greater risk.

Time commitment: researching cars, attending inspections and potentially dealing with post-auction logistics like repairs or registration can be time-consuming. Be prepared to invest the necessary time if you decide to pursue buying a car at auction.

An auction can be a great way to find a new car at a good price. With the right preparation and a strategic approach, you can navigate the auction environment with ease. If you need any help financing your purchase, turn to Savvy. We can provide hands-on support to find a car loan tailored to your needs and budget. Get started with Savvy today!

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