7 Things to Consider While Buying a Car From Auction

Buying a car from an auction is a great way to get a fantastic deal on your next vehicle. However, if you don’t know what you’re doing, it could also be a great way to spend more money than you want or get stuck with a lemon. 

But don’t let that scare you away from car auctions. As long as you do your homework and go into the auction prepared, you’ll be just fine.

Furthermore, you’re can get a used car at its trade-in value instead of its resale value. You can literally save thousands of dollars on a reliable car by winning it at an auction. 

The key is knowing what you’re doing. We’re here to provide a little guidance. Keep reading for everything you need to know about how to buy a car from an auction.

1. Do Your Homework

First, you need to do a little homework before bidding on a car at an auction. We recommend attending the local auctions in town to get a feel of each one.


You need to experience first hand the excitement of a hot item getting bid on left and right. Otherwise, when it’s your turn, you’re likely to get caught up in the commotion and end up overbidding.  

Additionally, get on the auction website to see which vehicles are being sold. Do some price-matching beforehand to figure out fair prices for each car you’re interested in.

Types of Auctions

Next, look into the type of each auction. Not all auctions operate the same way. There are green, yellow, and red light auctions. 

Greenlight auctions sell vehicles with no known issues. If a mechanical problem is discovered, there are actions you can take to remediate the issue or back out of the sale. 

Yellow light auctions sell vehicles with no known issues, as well. However, if one is discovered, the buyer isn’t guaranteed arbitration.

Finally, red light auctions sell vehicles as-is. Unless you’re a seasoned mechanic, stay away from red light auctions to avoid getting stuck with a lemon.

2. Determine Your Maximum Budget

Now that you know a little more about the car auctions in your area, you need to determine how much you can afford to spend on your next vehicle. We recommend staying well within your maximum budget to avoid getting in over your head or putting yourself under financial strain.

Roughly 4 in 5 American workers live paycheck to paycheck, struggling to get by each month. This is because we tend to bite off more than we can chew when financing vehicles, taking out loans, or using credit cards.

Set your maximum bidding limit and stick to it. Don’t get bidding fever and end up spending more than you wanted.

3. Think About Additional Costs

When buying a car from an auction, remember that there are more costs than just the winning bid price.

For example, at most auctions, the auctioneer gets 15-20% of each item’s sale price. If you buy a car for $10,000, for example, you’ll owe an additional $1,500 to $2,000 to the auctioneer. In most cases, you still walk away saving tons of money.

Car ownership also comes with:

  • Auto insurance fees
  • Taxes
  • Yearly maintenance and auto repairs
  • Registration fees
  • Etc.

If you’re not driving the vehicle home or bought a car online from out of state, you also need to think about shipping costs. Check out our car shipping calculator to get a good idea of what to expect.

4. See the Vehicle’s History Report

Learning how to buy a car from an action means learning how to make a wise investment. No matter where you’re buying a used car from, you need to get your hands on the vehicle history report. Most vehicles are tracked from the day they leave the manufacturing line via their VIN. 

The history report documents:

  • Number of previous owners
  • Locations of registration
  • Factory recalls
  • Major accidents or repairs
  • Maintenance history
  • Commercial use history
  • And more

If a car in the action doesn’t come with a vehicle history report, it may be better to pass on the bidding. 

5. Take the Car on a Test Drive and Have It Inspected By a Mechanic

In some cases, like in green light auctions, you can win a car through bidding, but test drive it and get it checked out by a mechanic before you commit to the buy. If there are no problems with the car, you are committed to buying the vehicle. 

However, if any issues are discovered, you can back out of the bid or insist the seller fixes the problem. 

On the other hand, if you’re at a yellow or red light auction, you will likely be stuck with the vehicle you won through bidding, regardless of what issues or damages you find. 

6. Figure Out How to Relocate the Car

As noted earlier, buying a car from an auction sometimes requires figuring out how to ship it home. Before hiring a car shipping company, find reviews and testimonials to gauge their credibility.  You should also inquire about their prices. 

Additionally, ask what services the car transport company offers. For example, there are open and enclosed shipping options. If you’ve won a bidding war for a valuable classic car, you’re likely to want the most protection you can get, which would be enclosed transportation.

Finally, find out if they ship door-to-door. Some car shipping companies have limited options regarding where they pick up vehicles and where they drop them off. 

7. You Will Need Cash or a Pre-Approved Loan

Lastly, understand that most car auctions require upfront payments. These can be in the form of cash, money orders, or pre-approved loans. Therefore, buying a car at an action requires some planning.

If you’re planning on bidding on a car, you need to have your finances ready to go. If the car is financed, this also means getting liability auto insurance. 

Are You Planning on Buying a Car From an Auction Soon?

If you’re looking to save some money on your next vehicle purchase, buying a car from an auction may be a great solution. Just make sure you walk in with your eyes wide open and don’t go over your maximum budget. 

And if you’re going to need a car transport company, we can help. Contact us today to learn about our shipping services or to get a free quote.

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