You can buy repossessed cars primarily from three types of sources: banks and credit unions that repossess the vehicles, government auctions (like those from the IRS or DEA), and online auction platforms that specialize in selling these cars to the public. The most accessible and common method for most buyers is through online marketplaces like Copart and Insurance Auto Auctions (IAA), which list thousands of repossessed vehicles from various lenders.
The primary advantage of buying a repossessed car is the potential for significant savings, as lenders are motivated to sell these assets quickly to recoup their losses. However, it's crucial to understand the risks. These vehicles are almost always sold "as-is," meaning there is no warranty or guarantee of its condition. You must be prepared to do your due diligence.
Key Steps to Buying a Repossessed Car:
- Find Listings: Start with the big online auction sites. Also, check the websites of local banks and credit unions, as some hold their own auctions.
- Research the Vehicle: Once you find a car of interest, get a vehicle history report (like Carfax or AutoCheck) to check for accidents, title issues, and service records.
- Inspect the Car: If possible, inspect the car in person or hire a mobile mechanic to do it for you. Look for signs of poor maintenance, rust, or unusual noises.
- Understand the Fees: Auction prices are just the starting point. Remember to factor in buyer's premiums, documentation fees, and taxes, which can add 10-20% to the final cost.
- Arrange Financing and Transportation: Have your financing pre-approved, as you'll often need to pay quickly. Also, plan for how you'll transport the car if you win the bid.
| Pros of Buying Repossessed | Cons of Buying Repossessed |
|---|
| Lower purchase price than market value | Sold "as-is" with no warranties |
| Wide selection of makes and models | Limited or no opportunity for test drives |
| Potential to find well-maintained vehicles | Competition from other bidders and dealers |
| Straightforward buying process at auctions | Additional auction fees and premiums |
