Buying a car at auction? Follow these 5 tips to avoid buying a lemon


By ,
Ask a Lender
November 22, 2017


Man-looking-at-broken-down-car-with-hood-up

Key Points

5 tips for avoiding lemons at car auctions

  • Think like a mechanic — look for damage and wear
  • Obtain a VIN report to view the vehicle’s history
  • Look for flood damage, like rust or mold
  • Pick the right auction: Dealer or public
  • Look online for government or police vehicles 

It’s natural to want the best deal possible when buying a car. Car auctions seem like they fit the bill. You can bid on vehicles that have been repossessed or impounded, or are being sold as surplus by governments or police departments. But are car auctions really worth it?

Car auctions can yield amazing deals, but often at great risk to the buyer. The vehicles are sold as-is, meaning the buyer has no legal recourse if the car ends up needing major repairs. Heed the following tips to get the best deal at an auto auction, while also taking care to avoid lemons.

1. Think like a mechanic

If you’re buying at auction, you probably won’t be able to drive the car to a local mechanic for a full inspection. Some auctions allow you to take vehicles for a test drive before bidding, but typically, the most you can do is start up the car and inspect it.

That means you’ll have to rely on your eyes and ears to pinpoint any potential problems — and the more you can think like a mechanic while inspecting the vehicle, the better. Take a look under the hood. Inspect the interior of the car for cosmetic damage and any signs that it may have been involved in a major accident. Check the wiring for signs of electrical damage.

If you’re completely clueless when it comes to mechanics, consider bringing along a savvy friend who can keep an eye out for problems — or, even better, bring along an actual mechanic. They won’t be able to do a full inspection, but they can likely spot potential problems you wouldn’t think to look for.

2. Obtain a VIN report

The National Insurance Crime Bureau (NICB) offers a free VIN-lookup service called VINCheck that can tell you whether a vehicle has been reported as stolen, or whether it’s been reported as a salvage vehicle. More comprehensive information is often available from paid services, such as CarFax or AutoCheck. These reports may contain information on liens, structural damage, accidents and more.

An additional resource is the National Motor Vehicle Title Information System (NMVITIS). Businesses and agencies report to NMVITIS regularly in an effort to protect consumers from stolen cars and unsafe vehicles, among other things. The database includes information from states, insurance carriers and the salvage industry. Consumers must purchase reports containing NMVITIS data from third-party vendors; the NMVITIS maintains a list of approved data providers on its website.

None of these databases can provide a 100 percent accurate vehicle history. Even if a report for a car comes back clean, it could have major problems or a history of big repairs. But the databases can at least help you identify cars that have a proven history of problems.

3. Look for flood damage

Whenever there is a major hurricane or flooding event, the used car market is flooded (no pun intended) with water-damaged vehicles. Some dealers take these damaged vehicles across state lines, “wash” the titles — removing any documentation that the car was damaged in a flood — and sell them to unsuspecting consumers.

Look out for signs that the car was flooded. Smell for mold. The scent of strong air fresheners may indicate the seller is trying to cover up the smell of mold or mildew. Pay attention to the vehicle’s electrical components. Any damage to the electrical system could be the result of prolonged water exposure. Look for rust, both in the interior and exterior of the car. If the upholstery or carpeting in an older car appears brand-new, be suspicious: It may have been replaced to hide flood damage.

4. Pick the right auction

There are two main types of automotive auctions: Dealer auctions, which are only open to licensed dealers, and public auctions.

  • Dealer auctions. Only to licensed dealers, there are ways to access these events. The most obvious, but also the most impractical for most, is to become a licensed dealer. You may be able to enlist the services of a dealer to bid on a vehicle on your behalf. There are also online auction sites that give people access to dealer auction listings (more information on online auctions follows).
  • Public auctions. Public auctions sometimes yield great bargains, but they can also be particularly rife with lemons, as dealer auctions tend to snatch up many of the better cars. If attending a public auction, take great care to evaluate vehicles thoroughly before making a purchase. It’s important to understand that even if you do your due diligence, you may still end up with a clunker, and you’ll have no legal recourse if you do.

5. Look online

Vehicles are available at both in-person auctions, and online auctions. Online auctions typically last about a week and allow you to place bids against other consumers in real time.

One of the benefits of online auctions is that it can give you access to vehicles listed in dealer auctions that you wouldn’t normally have access to. Government vehicles are often available through government auction sites such as GSA Auctions and GovSales.gov.

Many people look out for decommissioned police cars, tempted by their turbocharged engines. Though police cars can be some of the most affordable used cars on the market and boast some attractive performance features, most have been driven strenuously and may be in need of major repairs.

 


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