How to finance a car bought at an auction

By ,
Ask a Lender
January 2, 2018 | Updated January 3, 2018


Key Points

Financing options for auto auctions

  • In-house auction house financing
  • Unsecured personal loans
  • Credit cards

Car auctions are one way to buy a car at bargain prices (if you can avoid buying a lemon). But what if you’re strapped for cash and can’t buy an auction car outright? Can you get financing to buy an auction car?

You can, but it’s not common. The purpose of an auction is to sell a car quickly for cash. Financing adds another layer of complexity, when most people involved in an auto auction are looking to get rid of a car quickly and easily. That’s why many auction houses only accept cash or cashier’s checks.

That said, there are two main places you could look for financing.

Auction house financing

Some auction houses offer their own financing — similar to the way car dealerships offer their own in-house financing. The best way to find out if an auction house offers financing is the simplest — just ask. Auction houses may also offer information on in-house financing on their websites. The exact terms and qualifications vary depending on the auction house.

Unsecured personal loan

There are two kinds of personal loans: those secured by collateral – generally an asset that is of equal value to the amount you are borrowing – and those with no collateral. If you default on the loan, the bank can take possession of the collateral.

Unsecured personal loans can be used to fund a variety of different expenses, including purchasing a used car at an auction. Because the loan isn’t backed by any kind of collateral, lenders view the loan as a higher risk, and so tend to charge a higher interest rate compared to other forms of financing. With limited options for financing auction vehicles, however, an unsecured personal could be your best bet.

Credit card

Though it’s typically difficult to put a car purchase on a credit card, some cars at auctions are so cheap that you may be able to use a credit card without even raising your limit. Not all car auctions allow you to make a purchase with credit cards, however, so be sure to check ahead of time. Another option is to get a cash advance for the amount on your card.

Be aware, however, that using a credit card can be an expensive way to finance a vehicle, as most credit cards come with relatively high interest rates. If you are able to pay off the balance in a short amount of time, it may make sense. Otherwise, it’s likely best to focus on other forms of financing.

Deposit requirements

Though you may be able to use any of the above options when buying a car at auction, some auction houses may still require you to place a cash deposit before you’re allowed to bid on any vehicles. The exact amount of the deposit varies with each auction house.

Auction houses charge a deposit to help ensure that people bidding on vehicles will pay for their purchase if they win. Check with the auction house to see their policies on refunding the deposit if you don’t end up purchasing a vehicle. 

Compare Auto Lenders