Car Buying From Auto Auctions: The Good, The Bad And The Ugly
When it comes to buying a used vehicle you have basically three options. First, you can buy from your friendly neighborhood car dealer. Second, you can buy from a private owner. And third, you can buy from an auto auction. Most people don't really like to shop from a car dealer although that's where most vehicles are sold. You can sometimes get a good deal from a private owner, and since you don't have to pay taxes (in most states) and or the dealers "service fees" you can save money most of the time. There are other advantages and disadvantages from buying from a private seller, but we'll talk about that later.
Since this Hub is about buying from an Auto Auction, let's talk about why you (most people anyway) shouldn't buy in that environment. Okay, so you're saying, "But Scott, I know you can buy the cars cheaper at an Auto Auction. Why shouldn't I buy one there?" Well good question Bunkie, so let's take a look at why you should (let's get the easy part out of the way first).
The only, and I say the only good reason to buy from an auto auction is to save money. All things being equal with apples to apples vehicles, you could save 1-2K by making your purchase at an auto auction. The key words there are "you could save." You see, auto auctions are a breeding ground for deception and subterfuge.
The Bad & The Ugly
Think about where vehicles from car auctions come from and why they might be selling there. Let me give you an example. A car dealer takes a car in on trade. It's a nice looking 4 year old vehicle with average miles. The dealer runs the car through their shop to recondition the car to be sold on their used car lot. The car goes through the shop and a week later is on the front line of the used car lot. The car sits for a week and when a sales person has an interested customer they go for a test drive. While they are on the test drive, the air conditioner starts to blow warm air. The salesperson tells the customer, "No problem Mr. Jones, it just needs a little Freon. I'll get that handled when we get back to the store." When they get back to the store the customer is a little weary of the car and decides to keep looking. Meanwhile back at the dealership, they take the car back to a mechanic to put Freon in the car. When the mechanic takes a closer look at everything he uncovers a bigger problem than just adding some Freon.
The evaporator on the A/C unit has a leak and needs to be replaced. On this particular car, it's going to cost the dealer a whopping $2,000 for the repairs. Now when the particular car came in on trade, the used car department had to "step up" in the trade in order to make the new car deal. In other words, they paid more than they wanted to in order to put a deal together. Now they are looking at putting another $2,000 on top of the money they already spent on reconditioning. That $2,000 might just represent all the profit they'd make if they sold it retail. So what does the Used Car Manager say? "Put some Freon in it and send it to the auction."
More than likely, the reason that the customer traded this car was because they knew it had a bad A/C evaporator. They probably put Freon in it right before they traded it so that when the dealer looked at it the air was blowing cold. It could take weeks before it needs Freon again. Well that's the same reason the dealership will send that car to the auction. Fill it up with Freon and when an unsuspecting buyer purchases the vehicle they are pretty much out of luck.
There are other examples of why and how vehicles end up at a car auction, but suffice to say if the dealer could make money off the car it wouldn’t be for sale at an auction.