Professional auto dealers have been buying and selling at dealer only auto auctions for years. They enjoy the safely of having a clear and transferable title provided at the time of the purchase, as well as many other benefits. If this process is good for professional dealers…why aren’t you buying your car the same way?
Use an experienced, professional and licensed auction company
A car or truck requires a title to prove ownership prior to registering the vehicle to you by your state. A “clear title” means there is no loans or liens on the title. If there is a lien stated on the title, you must have a signed (and usually notarized) lien release from the lien holder. This can either be performed directly on the title itself, or with a separate lien release form. If you do not have the lien released, the lien Will remain on the title, and you will assume the responsibility of payment of that lien. Make sure the auction company understands title procedures. Their mistake will become your loss. Also, the auction company will normally collect all funds and disperse them to the seller and some other taxation recipients. Their failure to pay the funds may send you into a legal situation with the seller claiming ownership of the vehicle. As with any auction experience, make sure you fully understand the terms and conditions of the auction and the purchase. You will be bound to them all by your participation in the auction.
What about financing the vehicle?
Normally, the seller will not provide any financing and the vehicle will require payment in full….most likely at the end of the auction. You will need to understand what the auction company will accept for payment. If you intend to finance the vehicle through your bank or some other 3rd party source, speak with the auction company days prior to the auction to find out if they will work with irrevocable bank letters of credit or any other arrangements. Quality public auctions will have a financing source on site for those buyers without their own source. You will be required to meet certain requirements to qualify, so speak with them days in advance.
Preview the vehicle
The auction company with allow you to look at the vehicle before the auction date. You will normally not be allowed to drive the vehicle due to liability and insurance reasons. You usually can her them run, check the air conditioning and other hands-on options and equipment. Look at the tires, the paint, the interior condition, under the car for leaks, under the hood for leaks, check for the spare tire and jack, notice any odors that may offend you (musty may reveal previous flood damage). This is your only chance to make sure you want the car. You will not be allowed to change your mind if you are the high bidder. The vehicles will be sold AS-IS and no bids may be rescinded. Ask the auction company if you can purchase a 3rd party warranty. This will protect you against large cost items such as engines and transmissions. You may hire a mechanic to come with you and check the vehicle out on preview day.