Financing a car bought at auction
Car auctions could be a great way to score a bargain on your next vehicle – whether you are after a late model premium vehicle, or just a little run-about to drive to and from work, you might find the car you’re after for possibly less than you expected.
In some ways, these lower prices may reflect the risk that you the customer faces – you can’t test drive the vehicles before the auction, and you’ll only have a limited opportunity to inspect the vehicle before you start bidding.
Also you buy the car 'as is' and if you're the winning bidder, you can't change your mind without potentially incurring some fees.
Arrange your car finances early
If you’re considering financing a car bought at auction, there are a few important things to keep in mind. Firstly the auction house will expect to be paid for the sale within a few days of you winning the auction.
This may not be enough time to arrange the best car loan available, and if you miss the deadline for payment, you lose your right to purchase the vehicle, and there could be a cancellation fee.
That’s why it could be a good idea to consider obtaining pre-approval for your car finance before you start bidding on cars. That way you'll have an idea what your limits are so you can avoid unexpected delays.
Of course, there can only be one winner at an auction, and that might not always be you. It’s important to be upfront with your financier or car finance broker, and tell them that you are purchasing a car from an auction.
Know your car loan's pre-approval limits
Ask what the process will be if you lose the auction and need to have your finance application re-quoted for a different amount or vehicle. It could be a while before a similar vehicle is up for auction again, so it’s worth seeing how long your approval or pre-approval is valid for.
Ask what the process will be if you lose the auction and need to have your finance application re-quoted for a different amount or vehicle.
Understand the risks of buying a car at auction
One of the biggest fears many car buyers have about auctions is the inability to test drive the vehicle they are considering purchasing.
Other than the vehicle history report provided by the auction house, and the visual inspection you can conduct yourself, you don’t get much of a chance to make sure the vehicle you are about to purchase is generally problem-free.
Like anything in life, it’s always a balance of risk and reward, if you’re particularly price-sensitive, or have champagne taste on a beer budget; a car auction could be a great way for you to get the vehicle you want at a price you can afford.