Pros and Cons of Buying a Vehicle at an Auction

TV shows and movies often depict auctions as a pastime for the rich and famous who are willing to spend a fortune on a Picasso or a vase that’s an ancient artifact. But auctions are also a mainstay of car dealers, who frequent them to purchase vehicles for their used car departments. They’re not looking for a work of art – just something they can buy at a wholesale price, spruce up a bit, and then sell to a consumer to make a profit.

Dealer auctions occur all over Canada both online and in-person, and some are open to the public, so the average consumer can bypass the middleman (the used car dealer), buy directly at an auction, and save some money in the process.

“Generally, you can expect wholesale prices at an auction,” explains James Watson, Sales & Marketing, North Toronto Auction. “The public is coming to look for a deal on a vehicle. We always say you get to set your price – so you come with your own budget, and you only bid up to that amount. And, of course, another benefit is selection: We’ve got over 250 vehicles per public auction.”

Getting Started

You’ll want to Google “public car auction” to find companies in your area that allow consumers to bid. Watson explains that his company holds two public auctions each month, and that anyone who plans to bid on a vehicle can attend the preview, which takes place during the four days before each auction.

“If someone wants to participate in the auction, they can register to bid with us,” he adds. “All they need is a valid Ontario driver’s licence. We’ll give them a bidder badge and they can walk the yard and inspect the cars before the auction starts on sale day.”

Bidders are allowed to inspect the vehicles, check under the hood, and even start the engines. “They just can’t move them anywhere or test drive them,” Watson explains. On auction day, the cars are driven into the bidding lanes, proving that they actually are in working order.

Financing Options

Auctions don’t typically require you to prove that you have enough money to pay for a vehicle. You don’t have to show them a bank statement, but you might be asked for a deposit before you’re allowed to bid.

“We also don’t offer financing,” Watson adds. In other words, it’s up to the bidder to come up with payment. “If you buy a vehicle on Saturday at our auction, you have until Tuesday of the following week by 6 p.m. to pay for it in full and pick it up.”

Before bidding on a vehicle, you’ll want to check with the auction about payment terms. Don’t assume that you can walk in with your Visa or MasterCard to pay for your vehicle. Some only accept debit, a certified cheque, or a bank draft. “We also accept cash,” Watson says about his company.

Buyer Beware

While the idea of buying a used vehicle at wholesale prices may seem appealing, it’s not without risks. First, none of the vehicles are sold with a warranty. In fact, there’s no guarantee that your new vehicle will even pass a safety inspection. “Everything we sell is ‘as is, where is,’” Watson adds.

However, for an additional fee, after you’ve paid for the vehicle, some auctions have a garage on-site that can fix whatever is broken in order to bring your vehicle up to the point where it will pass a safety inspection.

“The buyer can leave the vehicle with us, we can do the safety inspection and the safety work, if they want us to,” Watson adds. “Once the safety is completed, we then do the ownership transfer.”

Before you register with an auction as a bidder, you’ll also want to find out where their vehicles are coming from. Some might be repossessions, some might be salvage vehicles with significant damage, and some might be privately-owned vehicles that are being sold by their owner. It’s a bit of a mixed bag, and it’s important to know what you’re buying, because some vehicles might be a good deal, while others might need expensive repairs before they’re roadworthy.

Watson says that many of his vehicles are former fleet vehicles owned by the Ontario Provincial Police, the Ontario Ministry of Transportation, and other government organizations. “We also get vehicles from dealers who bring in their trade-ins, people who want to sell their vehicles at auction, and financial repossessions that we sell on behalf of finance companies.”

Final Thoughts

Auctions aren’t for everyone. Although you can get a good deal, you might also end up with a purchase you’ll regret. It’s a bit of a gamble, and it’s not for the faint of heart, so make sure you understand what you’re getting into before raising your hand – going once, going twice, sold!