Financing a car purchased 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 you the customer faces – you can’t test drive the vehicles at auction, and you’ll only have a limited opportunity to inspect the vehicle before you start bidding.
If you’re considering financing a car bought from an 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 finance you need, and if you miss the deadline for payment, you could lose your right to purchase the vehicle, and there could be a cancellation fee. That’s why it’s a good idea to consider obtaining pre-approval for your finance before you start bidding on cars.
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 finance broker, and tell them that you are purchasing a car from an auction. 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.
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. This is where an extended warranty could come in handy and may be something to think about if the car is eligible.
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 great price.