You've likely seen car auctions in movies and TV shows, and maybe you’ve caught a few minutes of a famous real-world auction that centers around classic cars. One might assume a car auction is only for rare and expensive collector’s items, but there are all kinds of car auctions out there, many of which are accessible to the everyday car buyer.
The different types of car auctions
The world of car auctions is virtually as wide and varied as the world of cars themselves, but all auctions can be broadly categorized in two ways:
- Closed, or private, auctions: Closed auctions are reserved for a select group of buyers and sellers. This is often on an invitation-only basis.
- Open, or public, auctions: Public auctions are open to the public. There may be an entry or registration fee, but anyone can participate.
Within these two broad categories are different auction variations:
A dealer auction is a type of private auction where car dealerships and other industry insiders acquire vehicles for their lots. These are typically closed, but if you have friends or family in the industry, there’s a chance they might be able to get you in or act as your proxy bidder.
Since they’re generally destined for resale, cars sold at dealer auctions may already be in decent working order. Another plus: Prices can be competitive when compared to the retail market.
Government auctions are public auctions for the sale of cars previously owned and used by government agencies. This could be anything from cars used by your local parks department to cars used or confiscated by federal law enforcement.
Government vehicles may be maintained regularly and sold at competitive rates. That's in part because the purpose of these auctions is to clear inventory, not maximize the sales price. These vehicles may, however, have extensive mileage on them and could just be in “working” shape. Cars that were confiscated by law enforcement may be more of a roll of the dice in terms of condition.
Repossession auctions are public auctions that sell cars which have been repossessed. Often, the repossession is due to missed car payments. These auctions may also sell vehicles that have been abandoned by the owner. Prices at repossession auctions may be low, but there are no guarantees as to the vehicle’s condition.
Salvage auctions are public auctions intended for the sale of salvage titles — cars that an insurance company has deemed a loss to repair. This could be due to anything from a flood to a fire to a serious accident.
Salvage titles are often sold for a fraction of the cost of undamaged cars, largely because they carry greater risk, and they typically require extensive repairs and inspections before they can be on the road again.
How does a car auction work?
Buying a car at auction requires just a little bit of know-how and boils down to the car going to the highest bidder. That said, there are a few other details worth knowing about.
For online vehicle auctions, whether private or public, cars will usually be listed in advance to give prospective bidders time to look over the details. For in-person auctions, the viewing window for interested buyers to inspect the car may be limited to just a few short hours.
If you’re a buyer, you may need to pay an entry fee and register to be a bidder. This may involve putting a hold on your credit card to ensure you’re committed to whatever you bid on. Bids can be placed in various ways: by raising your hand or bidder number, via an online portal or over the phone using a proxy bidder.
If your bid ends up winning, you’re generally obligated to follow through with the purchase at the winning price. Failure to do so may result in penalties or legal action. In most cases, you’ll also need to arrange transport for the vehicle.
Buying a car at auction: pros and cons
Everything in life has its pros and cons, and it’s no different with car auctions. Let’s take a quick look at some of them:
Pros of buying a car at auction
- Price: Arguably the most attractive aspect of buying a car at auction is the price. The lure of potentially scooping up a great car at a low price entices many buyers to try their hand at auctions.
- Rarity: Another major selling point of auctions, especially classic car auctions, is the chance to buy a classic car that’d be hard to find, otherwise. Vintage cars, exotic models and one-of-a-kind concept cars are all commonly sold at rare car auctions.
Cons of buying a car at auction
- All bids are final: Auctions can be an exhilarating experience, but it's easy to get swept up in the excitement and make a bid you end up regretting.
- Cars are sold “as is”: Auction houses rarely provide any sort of warranty on the cars they sell. Most of the time it’ll be a used car, and the information they have on the vehicle is also only as good as whatever the seller provides. If the car breaks down on your way home, neither the seller nor the auction house is typically required to provide any recourse.
The world of car auctions is diverse and fascinating, while participating in a car auction can be its own thrill. Afterall, you could find a great deal on your next daily driver or scoop up that rare classic you’ve always wanted.