I remember when my sister and brother-in-law decided to lease a new Ford Fusion Hybrid in 2015. As strictly a used-car owner, I envied how shiny and clean it was. It was quiet, complete with the latest technology and great on gas.
The only downside, in my opinion, was its lease price of $390 a month. Four years earlier, I’d only paid $10 more for an entire car.
That’s right, I bought a car for 400 bucks.
How to Buy a Car at an Auction
I purchased my 2001 Chevrolet Cavalier in a pretty nontraditional way: at a car auction.
Auto auctions allow buyers to purchase used cars through a bidding process, which usually results in lower prices than buying at a dealership.
Many car auctions are only open to car dealers and require a dealer license to participate, but a quick Google search will turn up auto auctions open to the public all over the country. What’s more, online auto auctions like eBay Motors make it possible to buy a car from the comfort of your own home.
Car auctions aren’t as widespread as established car lots, and you’re at a greater risk of ending up with a beater car. But if you’re careful, you can score a serious deal like I did.
My Experience Buying a Car at Auction
I was working for a newspaper at the time, and my company was trying to get rid of some of the old cars in its delivery fleet by selling them via blind auction to employees.
When we got the notice about the deal, I honestly didn’t give it much thought. After all, I had a great vehicle — a 1999 Lexus RX 300 — that had been with me through college and on numerous trips up and down the east coast. It was my baby. It was dependable and got me where I needed to go.
There was only one issue: My boyfriend at the time and I were cohabitating and sharing one car between us; that wasn’t quite working out. Buying a new car wasn’t high on our list of priorities, but we couldn’t resist the chance to put in a small bid when the opportunity presented itself.
Back then, my idea of car buying was limited to visiting a car lot and shelling out hundreds in monthly payments or saving up over time to purchase a decent used car. I had never given a car auction a serious thought.
I chose a fairly low bid of $300 on the Cavalier, thinking I’d never win. Then the woman running the auction contacted me and said my bid was tied with one other person and requested we both submit a counterbid. I upped my bid by $100 and was geeked to find out I’d actually won the thing.
Now, I consider myself pretty darn lucky. Not only was the initial cost low, but the car turned out to be a gem.
It was immobile when I purchased it, but all it needed was a new battery and spark plugs. The mileage was low, and it had air conditioning; the AC on my Lexus had stopped working.
The Cavalier lasted a good three years before it was totaled in a hit-and-run accident — had I not been rear-ended, I would have gotten more years out of it. What’s more, the insurance company ended up paying me $2,400 — which is $2,000 more than I initially paid for it.
Could You Try Buying at a Car Auction?
Car auctions don’t always dole out dream-come-true deals, but Diana Gerjes, a general manager at Interstate Auto Auction, said newcomers to an auto auction should be in good shape to make a successful buy as long as they do their homework first. She recommends seeing how the vehicle runs in advance of placing a bid.
“If they allow you to test-drive, definitely take advantage of that,” Gerjes said. “That’s the first thing I tell people.”
She advises first-timers not to get caught up in the excitement of the whole event and end up bidding on something they haven’t test-driven first.
Checking the value of the car beforehand is another essential task, Gerjes said. Potential buyers can check sites like Kelley Blue Book or Edmunds to gauge the average value of the vehicle so they don’t bid more than the car is worth.
5 Tips for Buying a Car at Auction
Although I didn’t test-drive my vehicle or refer to the Kelley Blue Book value, I ended up with a diamond in the rough.
Here are a few pieces of advice from my personal experience of buying a car at auction.
1. Know Something About Cars — or Bring Someone Who Does
Don’t ask me about the difference between a catalytic converter and a carburetor. I’m not going to know my transmission is going bad by how my car’s running.
Despite my total ignorance of all things automotive, I was lucky my live-in boyfriend knew a thing or two about cars. I also had family members I could call on should a problem arise.
Some car auctions also offer limited-time guarantees on certain aspects of the car’s condition.
2. Set Aside Money for Repairs
Generally, cars sold at auction are there for a reason. High mileage, engine or mechanical issues or past accidents might be what’s keeping the vehicle off a traditional dealership lot.
While your low bid could get you a great price, like mine did, you should factor in the cost of potential repairs or cosmetic work, if so desired.
Interstate Auto Auction warns that sedans could require repairs ranging from $300 to more than $1,000, while trucks, vans, SUVs and high-end luxury vehicles might need repairs ranging from $600 to more than $2,000.
CarMD’s 2018 Vehicle Health Index offers comprehensive information on which types of vehicles have the lowest frequency of repairs and which have the lowest average repair cost. The report found that the 2016 Audi Q5 had the fewest “check engine” related problems and a 2017 Hyundai Tucson had the lowest “check engine” light-related repair cost at $66.67.
Don’t forget to consider towing costs if you cannot drive the vehicle off the lot. Though my car initially didn’t run, we had no towing costs because we used our other vehicle to pull it around the block to our apartment complex.
3. Know the Car’s History
You can’t always accomplish this, but it’s great to have a little background intel on the vehicle in question. If you have the car’s vehicle identification number (VIN), you can check its history on a website like CARFAX.
I knew the cars from the newspaper delivery fleet had to be in decent condition, because the company regularly serviced them. Now, if the auction was held right after a bad flood in the area, I might consider how water damage could play a role in the car’s history.
4. Keep the Vehicle’s Potentially Short-Term Future in Perspective
I bought my car with the mindset that it might not last very long. Considering I probably would have spent $400 in transportation costs over the next few months without it, I thought if the car made it three months, I would have gotten my money’s worth.
With these types of deals, it’s safe to assume the car may not outlast a brand-new model leased from a certified dealer. But it was also comforting to know I wasn’t shelling out a $400 payment every month in a lease I was bound to for years.
5. Always Bid an Odd Number
This is probably going to be my No. 1 rule the next time I’m part of any blind auction.
When I found out my initial bid matched someone else’s, I could have kicked myself for not bidding $301 instead of $300. I could have saved $99 — or $99.99 if they’d allow me to bid $300.01.
Of course, bidding odd would not have the same effect at a live auction, where someone could instantly outbid you.
Nicole Dow is a senior writer at The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.