Is it Cheaper to Buy Cars at Auctions?


car auctions

Is there a better feeling than getting a great deal on a used car? There might be, but buying a car at a deep discount is always nice. Our search for good car deals can take us to a variety of places: newspaper ads, Craigslist, eBay, Facebook Marketplace, used car dealerships, and the list goes on and on.

What about car auctions? Sure, lots of car auctions are “dealer only” but there are plenty of them that are open to regular joes like you and me. I’m sure you have heard stories of the deep discounts that can be had at car auctions. I’m also sure that you have probably heard of some of the car auction horror stories.

Indeed, car auctions are not for the faint of heart, but in this article I want to dive into the nitty-gritty. Is it actually cheaper to buy cars at car auctions, and if so is the reduced cost worth the risk?

Are car auction vehicles cheaper?

It depends, not all cars at an auction are cheaper than what you can get them for on Craigslist. The chances of getting a bad deal on a vehicle are high, especially for novices unfamiliar with how car auctions work.

Overall, however, cars I have seen at auctions typically sell for at least 20% cheaper than what they would sell for in other platforms. The caveat is that the risk is substantially higher and that is built into the price.

Dealers will often bid on a variety of cars at auctions knowing full well that they will get a few lemons. Purchasing a couple of cars spreads the risk for dealerships. You probably don’t want to have to buy four or five cars though to spread your risk, so your stuck putting all of your eggs into one basket.

Another thing to consider about cheap car auctions is that not all of them are made equal. Online car auctions such as eBay Motors are not that cheap. In fact, I usually stay away from eBay Motors when I am looking to flip a BMW because the prices are HIGHER than what I can find on Marketplace or Craigslist.

So where are the cheap car auctions?saving money at car auctions

In my experience the best deals at auctions are usually had at local in-person auctions. Car auctions have been growing in popularity since the Great Recession, however, and I have noticed that even at some of the local auctions bidding has become more competitive.

One of my favorite spots is the local towing company in my hometown. They hold a public auction every two weeks with a variety of different cars from bank repossessions. I have bought a number of cars from them.

Check for public auctions, as dealer-only auctions are closed to the public. Do your homework on the vehicles that the particular auction house typically offers.

Another type of auction worth checking out is a government auction. These auctions usually include old police cruisers, but also a fair amount of regular cars driven by government employees. The advantage of government vehicles is that they are usually well maintained and in fair condition.

But should you buy a car at auction?

I rarely recommend car auctions as a good place to get a deal on used cars. Why? Because the vast majority of people who ask me for recommendations know very little about cars and are just looking for a good quality car at a discount.

In my opinion, car auctions are not for people who are inexperienced in the repair or buying and selling of cars. I have bought at least six or seven cars in auctions and nearly half of them turned out to be lemons. The fact that some were lemons did not hurt me because I had a business parting out used BMWs at the time, so I usually still made money.

But it’s far safer for most people to stick to used car dealerships and make sure that you get a warranty.

On the other hand, if you have some experience with repairing cars and/or buying and selling cars then why not give auctions a try? Your downside is limited and you already have a nice baseline of knowledge to draw on.

Here are some tips for getting a cheap deal at a car auction!

Tips on getting a good deal

1) Do your research on the particular vehicle you are interested in, some cars have known problems and maintenance issues.

2) If you have never been to a live auction before, I recommend that you attend one first and just spectate. Learn the ropes from other people before you dive into bidding.

Live car auctions are crazy, frantic places. They can be overwhelming for the uninitiated and different auction houses have different procedures for inspecting the vehicles and bidding, so observing first is key.

3) Different auction houses have different rules, be aware of them.

4) Many vehicles are sold without warranties!

Some vehicles are sold as guaranteed to be mechanically sound and most auctions will have some sort of arbitration policy required by the state.

But other vehicles will be sold “as is”, and the quality of the car you get is entirely dependent on your physical inspection. If you end up with a flood car, it’s your problem.

5) Auction fees vary between auction houses, be aware of them.

6) Be aware of recent “Acts of God”.

Did your area recently have record flash flooding that damaged/destroyed thousands of vehicles and homes? Earthquake/tsunami/tornado? Flooded junk does not come out of thin air, typically there will be a huge surge in flooded vehicles at car auctions soon after a recent hurricane.

Don’t be a sucker, I don’t care how clean the car looks, flood cars are worse than syphilis, just say NO.

7) Sometimes auctions will allow you to test drive

If an auction allows you to test drive the vehicle you absolutely should take advantage of that. Of course, as I mentioned previously, the rationale for cheap auction pricing is the risk involved. Test driving cars decreases the risk, therefore these vehicles are typically more expensive.

Conclusion

In general, it is absolutely cheaper to buy cars at auctions than pretty much anywhere else. But remember, there is a reason why these vehicles are so cheap. You are at a significantly greater risk of buying a lemon at a car auction, and warranties are extremely limited.

Because of this, I strongly recommend that you STAY AWAY from car auctions unless you already have some automotive repair skills and/or experience with buying & selling cars. Otherwise, you are setting yourself up for disappointment, and a junk car.

Stephen Metellus

I am a BMW enthusiast and owner of abetterbmw.com! I have been repairing, flipping, and parting out BMWs for nearly ten years. I love these vehicles and I hope you will find my articles and YouTube channel helpful for whatever BMW project you have in store!

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