- A car represents a major purchase, and many buyers explore several different ways of buying one in search of the best value. One of the methods that relatively few consider is buying a car at a public auction. While an auction can be a place to find a low price, it also carries certain risks that buyers need to be consider before attending.
- Even though auctions are known for the low prices some cars sell for, you face a risk of overpaying. This can happen if two or more prospective buyers bid the price higher than market value. In addition, some auctions require buyers to pay a buyer's premium on top of their winning bid. This premium may be a flat fee or a percentage of the auction price. While a car's sale price may seem like a bargain, a 10 percent buyer's premium can offset the bargain price.
- Buying a car from an auction means buying it in "as-is" condition, with no promise that the car will perform well or pass inspection. While most auctions allow potential buyers to get a hands-on look at the cars, some don't. Even if you can thoroughly inspect that car you want to buy, you won't be able to take a test drive or have a trusted mechanic give the car a more professional inspection until after you buy it.
- For some people, auctions have a bad reputation as places where unscrupulous salesmen take advantage of buyers looking for low prices. While this is not often the case, some auctions, especially private ones in states with little oversight, may mislead buyers. This can happen if a car is listed without disclosing its history. As the buyer, you're responsible for doing research on the car you want. Make sure that the vehicle identification numbers in different parts of the car and on the paperwork are identical. That way you can ensure what you're buying wasn't stolen or pieced together from several cars after a serious wreck.
- You risk getting an unreliable car when you buy at auction because it will come without a warranty or return option. This lack of protection is one of the reasons that auctioned cars sometimes sell for so little. For drivers looking for reliable transportation that will require minimal maintenance, auctions may not be the best route toward a purchase.
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