Buying Cars at Auction

I assume you talking about dealer's auctions. Not the kinds of auctions open to everyone. They generally work out well for buying cars under 4 years old, especially if the seller is the Credit/Financing arm of the manufacturer running a couple of hundred cars at once. You generally pay less then retail and oftentimes less than private party price. A very popular car with a lot of bidders may not be a great bargain however. If you go to the right auction on the right day you will have the choice of dozens of similar cars at once. The disadvantage is you may not have any time to inspect the car and there is a risk of the car not being in top-notch condition. To minimize the chance of unpleasant experience I recommend you buy a car still under factory warranty and sold by the manufacturer's financing arm as mention above. You will have to pay a fee to the dealer as well as the auction fee. If you have specific model. trim level, mileage combination in mind and know how much it should cost a dealer should be able to access past sales reports to see what the going auction price is and you can see if it is worth the hassle or if you would rather deal with a private seller.

I've had an associate pick up my last 2 cars at auctions because he owns a dealership. I've had him pick up a an additional 3 for family members. These were all within the last 3 years. These all came from Chicago auctions I think, but possibly Indianapolis too.

That being said, they were all very widely-available cars and many had been sold to fleets or rental agencies. This is the case with a lot of the cars at auction. Rental agencies want to keep low mileage, new cars on hand so they ditch them after 20,000 miles or so. Good news is they're very clean; bad news is I always drive my rental cars with total disregard for maintenance concerns, etc. so I'm sure these have been treated similarly. Like Dmax said, if you do agree to get one of these, be sure it's still under warranty. There are other cars available too of course.

All 5 of the cars I've had picked up were at a cost below wholesale, trade-in value. I could have turned around to a dealership, traded them in and made money (of course that would have defeated the purpose as I'd have to buy another car at retail). With these deals and my ability to drive a car that 500,000 other people drive too, I will always buy from auctions as long as I am able.

There is not much opportunity to inspect the cars - there are thousands of them typically and unless you're wanting the one and only 1972 Buick Wildcat in Antidisestablishmint Green, you have to decide on other criteria (e.g. I want a silver Ford 500 with leather and less than 15,000 miles.), get one of the 20 - 100 that are available, and hope for the best. This is especially the case for a dealer as they won't want to inspect specific cars for you. The person I went through is a very good friend of mine and he wouldn't do it for me. Luckily, none of the 5 vehicles had more than a tiny scratch on the bumper, but they were all less than 2 years old. My associate has invited me to go to auctions with him (but I could never find the time) so this is also a possibility if you have someone close who can access these and you're nervous about buying a car sight-unseen.

Hope that helps.

Oh, I also wanted to mention that a dealer will typically get a fax of the upcoming auction inventory. It should have the year, make, model, color, and mileage of the vehicles offered. Try to get that, look it over, pick out several options, and maybe you'll get a good deal on one.

Having been to a few dealer auctions, I can tell you that you better know what you're doing--or know someone who does--if you want to buy an auction car. For one, the environment is very hectic. You won't have enough time to test the cars. You can't drive it, you can't start it. Basically, if you can't tell a good car from a bad by just looking and feeling the paint, don't go. At a dealer auction, you will see cars from dealer trade-ins, from leasing companies, from rental companies, etc.,. Rental cars can be attractive candidates, but for reasons stated above you should stay away from them. For lease returns and dealer trade-ins, you have to keep in mind that many of these are dealer rejects. That means the dealers didn't want to buy them for whatever reasons. If it was rejected because the dealer is full of stock, then you might be able to find a good deal. More often than not, it's got something wrong with it and the dealer doesn't want to retail it for liability reasons. So, the bottom line is: go with someone who does this for a living, i.e. a used car buyer/manager. The guy I went with could tell a good car from a lemon within a minute of looking at it and touching it. If you can't do that, or doesn't know anyone who can, stay away from the auctions.

The answer to your question would 100% depend on what type of car you are looking for. Economy car? Mid-size 4 cyl sedan? Truck? Mercedes 600?