How to Buy Cars at Auction: Buying Guide & Tips

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How to Buy Cars at Auction: Buying Guide & Tips

David Goldberg

Auto Blogger

Last Updated 26.05.23

How to Buy a Car at an Online Auction
How to Buy a Car at an In-Person Auction
Is Buying a Car at Auction a Good Idea?
Tips for Buying at Auction
Final Thoughts: How to Buy Cars at Auction
Frequently Asked Questions: How to Buy Cars at Auction

More and more people are discovering a different way to buy a used car: through an auction. Cutting the middleman (dealers) out of the process saves time, money, and hassle.

Is there a secret to buying at an auto auction? Not really. But understanding a few things before bidding can make a world of difference. Read on as we explore what you need to know about driving away with a winning bid.

How to Buy a Car at an Online Auction

Buying used cars through an online auction may lack the excitement of a fast-talking auctioneer and an eager crowd. Still, it’s hard to beat the convenience of bidding from anywhere with an internet connection.

And just like an in-person auction, online auctions are fast-paced and can be over quickly (requiring constant attention by bidders).

Here are the steps to buying used cars at an online auction:

Review: Participating in an online auction begins by checking which vehicles are available on a particular platform. While there may not be anything of interest at the moment, vehicles cycle through regularly, so check back as needed. Some auctions may specialize in specific vehicles. If there’s a particular type of automobile you’re looking for, like repairable vehicles with salvage titles or classic cars, search auctions that specialize in these offerings. What are cars with salvage titles? These are vehicles declared a total loss by an insurance company as the result of an accident, flood damage, or other misfortune.
Registration: Like in-person auctions, online auctions require registration before any bidding. It’s a straightforward process where you’ll need to submit identification and a refundable deposit. These funds (also called buying power) are used to ensure the vehicle will be paid for. In the event of unsuccessful bidding, the deposit can be used to bid on another vehicle or be refunded upon request. This is also a good time to review the auction rules and house fees (including the buyer’s premium, a flat or percentage added to the final auction price, and the registration fee.) You may come across dealer-only online auctions, but these cars are sold only to those with a dealer license. Public auctions such as A Better Bid, on the other hand, are open to all.
Inspection: At a minimum, thoroughly examine the photos included in the auction listing. Studying the vehicle’s history report is equally important, it provides you insight into the car’s past. History reports are inexpensive and many auctions make it easy for you to purchase them. Depending on the used car at auction under consideration, hiring a mobile mechanic to do an on-site inspection is an option with some online auctions. At A Better Bid, you can preview any vehicle at the auction facility up to one hour before the live auction starts, which can give you even more insight into whether you want to bid on the vehicle.
Bidding: Online auction bidding can get as fierce as an in-person auction, but without the shouting. You’ll need to be very observant as there’s a short bidding window that requires paying close attention if you have hopes of winning the car and buying online. In the event bidding doesn’t reach the reserve price (the minimum the seller will accept for the vehicle), then no transaction occurs. Instead, in these cases, the auction platform will connect the seller with the highest bidder to facilitate a deal. Online auctions make bidding simple and convenient; A Better Bid uses Virtual Bidding Technology (VB3), a patented technology that allows buyers to bid online from anywhere with internet access, and even allows you to bid on any device such as a laptop, tablet, or smartphone.
Pay: If you’ve won a car auction, it’s time to pay up. Auction sites want this to happen right away, usually within a business day or two of the auction. Most auctions only accept wire transfers as the payment method, but some may accept other payments. Make sure you read the auction rules to ensure you’re aware of when the payment will be due upon winning the vehicle.
Pick Up: Once the money part of the transaction is complete, it’s time to collect your new car. You’ll need to arrange transportation, as salvage auctions require that only a licensed and insured shipping company can pick up the vehicle.
Ownership Documents: When the vehicle is collected from the auction facility, the auction will prepare your ownership documents and ship them to your mailing address.

Online Auction Pro Tip

Keep an eye on your buying power to know the maximum you’re able to spend at an online auction. There are ways to increase your buying power (such as by making a larger deposit or upgrading your membership plan), but you’ll need to do this before the auction starts. An in-demand vehicle can lead to robust bidding, so you’ll want to be prepared ahead of time.

How to Buy a Car at an In-Person Auction

Participating in an in-person auction isn’t radically different from an online auction; the winning bidder still gets the car. But there are a few differences to be aware of:

Registration: While most live auctions permit on-site bidder registration shortly before the auction starts, registering in advance, even for a public auction, is always a good idea. Many auctions provide online registration services, which can prevent on-site delays or sign-up problems.
Review/Inspection: Live auctions may offer online information about cars coming up for bid, but you’ll want to take advantage of the in-person inspections that are part of the process. These opportunities may be available days or hours before you can start bidding. Bring a mechanic along as needed.
Bidding: Live auction action is usually quite rapid, with bidding occurring in minutes, if not seconds. You may receive a number card or paddle that gets raised to signal your bid to the auctioneer, or simply holding up a hand will do the trick. If the bidding gets super active or you’re not getting noticed, look for bidder assistants (auction employees) in the crowd to help.
Payment/Pick up: Like an online auction, prompt payment is expected if you’ve won a car at a live auction. Some auction houses may accept cash. You’ll also need to pick up the car or make transportation arrangements.

In-Person Auction Pro Tip

It’s common for in-person auctions to use a sale condition light system. A green light indicates the vehicle qualifies for guarantee coverage, and there’s access to an arbitration process for working through disputes. A yellow light means limited guarantees or that arbitration services are applicable. And a red light signals “as-is” sale terms without a guarantee or arbitration. The meanings of the light colors will vary from auction to auction, so confirm details before bidding.

Is Buying a Car at Auction a Good Idea?

Those who’ve never participated in a car auction may wonder if buying a vehicle this way makes sense. The short answer is yes, but it’s essential to consider the pros and cons.

The Advantages of Buying at a Car Auction

Save Money: While pricing can vary with individual vehicle auctions, they are generally a less expensive way of buying a vehicle compared to car dealers, with none of the markups that a dealer adds to make a profit.

Greater Confidence: Reputable car auctions will disclose any conditions or issues known about a car; it’s a good business practice to be upfront. For instance, salvage auction vehicles are sold “as is, where is,” which means there are no guarantees or assurance. Other auctions offer a guarantee or return period. Certain auctions offer auto loan services for a one-stop shop. These are features never provided by a private party.

The Disadvantages of Buying at a Car Auction

Research Required: Any auction vehicles under consideration must be thoroughly researched. The analysis must include market pricing and an assessment of the specific model’s condition. Conduct this research ahead of any bidding.

Accelerated Bidding: Bidding can be a flurry of activity as an auction gets near its end, which can put pressure on bidders to respond. The need for quick decisions and the possibility of overpaying while buying a car is not to everyone’s liking.

Tips for Buying at Auction

Research Is a Must

As mentioned, the key to a successful car auction (as a buyer) comes down to the accuracy and thoroughness of your research. Begin by getting a ballpark valuation for the car under consideration. Edmunds and KBB have online tools to help with the process, while CarGurus or Autotrader will likely have listings for comparison.

Finish up by leaving no stone unturned about the vehicle’s condition. If possible, perform an on-site inspection and thoroughly review the vehicle history report. Depending on the auction, you may have an opportunity to ask the seller questions or conduct a test drive.

Set a Budget

Nothing spoils an auction experience like overpaying. So with detailed research on hand, you’ll be able to determine a maximum bid amount. Don’t go beyond this preset limit, no matter how crazy the bidding gets. Step back or walk away if a bidding war (intense competitive bidding) erupts; let someone else overpay (there’s more than one car at an auction) and suffer the resulting aggravation.

Remember that your budget cap should include charges for auction fees, transportation costs, motor vehicle(s) department fees, sales tax, repairs, and other costs.

Attend, but Don’t Bid

Consider registering for and attending a public auction but not bidding. This dry run will help you confidently participate in a future auction. Other than paying a bidder’s fee (not all auctions charge this) and making a refundable deposit, it’s a low-cost way to gain auction experience. Some auctions may charge a membership or annual fee.

A Better Bid uses a three-level membership approach that enables bidders to sign up for a plan that best matches their needs and interests.

Membership Type	Fee	Bid Limits	Transaction Fee	Extras
Standard	Free	5 vehicles at a time up to $30,000 total	$299 or 5% per vehicle^	n/a
Premium	$199/yr	10 vehicles at a time up to $60,000 total	$250 or 3% per vehicle^	Vehicle previews and 10 vehicle history reports
Pro	$349/yr	No limit on the number of vehicles or total amount for simultaneous bidding (security deposit requirements apply)	$199 or 1.5% per vehicle^	Vehicle previews and 50 vehicle history reports

^whichever is greater

In the case of A Better Bid, new bidders are automatically enrolled in the Standard (free) membership tier, but can easily upgrade at any time.

Look for Less Popular Vehicles

SUVs and trucks are all the rage these days, which means higher auction prices. If your goal is to score the best deal and you’re less concerned with the vehicle type, bid on cars that aren’t in demand. This could involve a sedan, wagon, or hatchback, and just about anything with a manual transmission (other than sports cars).

Final Thoughts: How to Buy Cars at Auction

With the proper preparation, a first-time car auction bidder can buy with confidence. Crucial steps include researching market value and vehicle condition, determining a budget, attending auctions for practice and seeing how bidding works, and knowing when to walk away from an overpriced auction.

Registration is simple, too, as are paying for and collecting a won vehicle.

Frequently Asked Questions: How to Buy Cars at Auction

Vehicle auctions offer lower selling prices because there’s no middleman, the retail car dealer.

High-quality vehicles come from many sources, including dealers needing to sell excess inventory and private sellers not wanting to deal with trade-ins. Auction cars can also come from government surplus, law enforcement seizures, and bank repossessions.

Buying an auction vehicle requires finding a car to bid on, registering as a bidder, bidding, making the highest bid, paying for the car that’s been won, and picking up the vehicle (or arranging for shipping).

It depends. Dealer auctions (sometimes called wholesale auctions) are open only to those with a dealer’s license; the public cannot attend dealer-only auctions. The same applies to dealer-only online auctions. Public auctions don’t require a dealer license to attend. With A Better Bid you can bid on dealer-only auction inventory without a dealer’s license.

Each state has conditions for starting an auction company and getting a business license. Generally, these requirements mandate financial and insurance standards and passing a test to receive a dealer license. Some states regulate business locations, too. However, you don’t need to go through this hassle, instead you can bid on dealer-only inventory through A Better Bid without a dealer license. ABB is open to public buyers.