Have you wondered whether you could get a real bargain on a car by shopping at a used-car auction — bypassing the dealership entirely to pay trade-in prices, sometimes shopping at the same places where dealers themselves buy inventory?
You can in theory, though the reality can be complicated. Hundreds of car auctions of varying size and type exist all around the country, some live (as often as daily in some places), some online, some both. Each one has different procedures, rules and fees. Some auctions are open to the public, some charge to participate and some are limited to licensed dealers. Complicating things further this year: The industry overall is just emerging from the COVID-19 pandemic, which affected live auctions in most states.
Meanwhile, competition to buy used cars is intense. A perfect storm of pandemic-related reasons has prices spiking — up some 10% in April alone — and cars in short supply. You’ll be bidding against dealer pros with lots to fill. Dealers started April with 18% fewer vehicles in inventory than a year ago, according to the Wall Street Journal.
Can You Save Enough to Be Worth the Trouble?
In this environment, an auction is probably worth it only if it also sounds like fun to you.
“You have to have an adventurous spirit,” said Phil Reed, automotive columnist at financial advice site NerdWallet. “If you’re a bargain hunter and have some knowledge of cars, you could both save money and enjoy the experience.”
How much could you save? Reed estimates that if all goes right, you might save up to $3,000 on a typical 5-year-old, mid-size car — essentially getting it for the vehicle’s trade-in value — though you’ll give back some of that in registration fees or other costs.
But the potential savings also come with risk. With online auctions, you’re buying based on photos and the auction’s description and condition disclosures, taking a chance on something you haven’t driven. Even live auctions typically allow you only to look the car over, sit in it and maybe start it up and put it in gear — but not drive it.
Also, there are limits on what you’ll save. You won’t save as much, for example, if you go after an auction vehicle that dealers are also currently hot for, such as a well-regarded SUV.
“They’re not giving away cars at auctions,” Reed said. “It’s about getting the best deal on a good car.”
One thing in your favor, however, is that used cars generally are more reliable than ever: “If you see a car with 100,000 miles on it, you might reasonably expect to get another 100,000 if you choose wisely,” he added.
Dealers Only, Sort Of
The biggest auctions — including national companies such as Manheim, IAA and ADESA — are generally open only to licensed car dealers. With multiple live locations, they’re a world to themselves, with big lots and multiple lanes of cars being auctioned simultaneously at dizzying speed. There are ways an individual can get access; some even make a limited portion of the cars available for sale to the public online. But in the present market, you could be bidding against dealers even in a public auction.
“Pros are everywhere, and they’ll bid on open auctions, too,” Reed said.
The hard way to get access — an impractical step if you’re just looking for one car — would be to get your own dealer’s license. Each state has different requirements, fees and bureaucratic hurdles, which can take some time to work through. An easier option for most people would be to hire a third-party broker with access to handle the bidding and details. Auction companies sometimes list them, and these specialists can also help you narrow the vehicles available at any given time to a few you might want to bid on.
“I know a number of people who have done this with success,” Reed said, but fees vary. “The key is how much the broker will cost you. Again, you have inserted a middleman.”
Many Other Choices
Many other live auctions exist, including regional and local auctions, with varying public access. You can search online for public or “open” auto auctions and for dealer auto auctions that allow public access. There also are separate, mostly public auctions just for police and government vehicles, as well as law-enforcement seizures. Several websites are available to find nearby government auctions.
Most of the best online-only auctions are open to the public. In a time when some people buy houses they’ve only seen online, it’s no surprise that these have become popular. One of the biggest and easiest to navigate is eBay Motors, which has a large variety of vehicles from around the country up for bid to anyone who registers at eBay.
Looking for More than Just a Bargain?
Various specialty auctions cater to buyers looking for something unusual, not just a bargain. Most are open to the public, though registration and transaction details will vary. They include big-dollar live and online auctions of classic and exotic collector cars from companies such as Barrett-Jackson, Mecum, Gooding & Co. and RM Sotheby’s, each with its own personality. But lower-end auctions also exist — both live and online, some regional or local — for niche, enthusiast, modern, classic or single-make vehicles. Among the most fun to peruse, even if you’re not buying, are Bring a Trailer, a curated mix of vehicles offered for bid; and Hemmings Auctions, an offshoot of the magazine company.
Some Auction Tips
Regardless of the auction, buyers should keep a few things, according to Reed.
- Given the bewildering array of auctions, Reed suggests that you can avoid being overwhelmed by narrowing your focus: “Pick one and learn all you can about that one,” he said. “Every auction will be different.”
- Pick an in-person auction if you can. Photos can be misleading, and condition descriptions might leave out certain details. Then arrive at the lot early so you have time to sit in the car you want, start it, put it in gear, open the hood, check for rust and blemishes, and look for oil leaks. That, plus the model’s reputation and the vehicle’s history, could give you a better evaluation.
- Practice before you bid. Visit the auction a few times before you’re ready to buy to get a feel for the process and rules, as well as the speed with which you need to decide.
- One of the biggest things on your to-do list should be a deep dive on pricing for what you want. Some auctions offer a “run list” ahead of the sale, where you can identify targets.
“You need to become familiar with other [pricing] sources and make sure you are beating that price,” Reed said. “The more you can learn about pricing the better you’ll be prepared.”
One estimating tool can be found here at Cars.com.
- Set the range you’ll pay. Once you have pricing in mind for a handful of vehicles (don’t set your heart on just one), fix a bidding range and stick to it no matter the emotion of the moment.
- Check ahead of time on necessary transport and insurance requirements to drive your purchase home. Many auctions want you to take possession of the car within a few days, and many also want payment in their specified ways in 24 hours, though some will allow up to three business days. Some accept credit cards, but auctions typically charge high fees for such payment.
- Understand the grading conditions and disclosure system for the auction, as well as the details of any arbitration process available should you run into problems. Many live auctions use a light system for vehicles on the block: for example, a green light for a vehicle that’s good to go with arbitration available for hidden problems, a yellow light if there are known issues not subject to arbitration, and a red light for a vehicle sold as-is. A blue light may indicate a title issue.
- Get a history report on the vehicle. It won’t disclose everything, but reports from private companies such as Carfax and AutoCheck, as well as from the U.S. Justice Department’s National Motor Vehicle Title Information System, can identify title issues; the number of owners and registrations; any fleet usage, damage or theft; and sometimes repair records.
- Avoid salvage titles unless you really know what you are getting into. These are cars that have been written off as a total loss by insurers for a variety of reasons. Some might be repaired and look OK, but they could be a problem to register and insure. They’ll have a salvage title (or, if you go through the process, a rebuilt title or its equivalent), which could make them hard to resell later on. More from Cars.com on salvage titles and pitfalls here.
More From Cars.com:
- Used-Car-Buyer’s Checklist
- What Is a Pre-Purchase Car Inspection?
- What Is a Salvage Title and Should I Buy a Car With One?
- Video: 10 Ways to Spot a Flood-Damaged Car
- This Hurricane Season, Learn to Spot a Flood-Damaged Car
- Are Extended Car Warranties Worth It?
- What Happens When a Car Is Totaled?
- Now Is a Good Time to Sell Your Extra Used Car; Here’s Why
- More Advice From Cars.com
Consider Private-Party Alternatives to Auctions
If the world of auction buying seems overwhelming, you might get nearly as good a deal — maybe just as good — on a vehicle for sale by a private party. The price might not quite equal the trade-in level you hoped for at an auction, but you also should be able cut your risk with a test drive and even a pre-purchase vehicle inspection.
“There are still good cars available from private parties,” Reed said. “And the private party may be in a hurry. You could almost match the trade-in price.”
Related Video: Warning Signs on a Used Car