Repossessed Cars for Sale - Repo Auctions and Sales

How and where to find repo cars at bargain prices

What is a repossessed (repo) car?
When a car owner fails to make on-time loan or lease payments, the bank or finance company will repossess the vehicle — take it back. Typically, the buyer will be given a chance to catch up on payments or be made a payoff offer to recover the vehicle. If the buyer does not or can not get the vehicle back, the bank or lending institution takes it over and will sell it to recover some or all of the loan balance.

Some smaller banks or credit unions may display repo cars in their own parking lots, with "for sale" signs in the window. These cars can be easily spotted when driving by the bank.

Most banks and finance companies hand over repo cars to a professional auction company. When the auction company sells the car, the bank gets the money, less a commission. Auctions can be public, private, or dealer-only auctions.

When a bank or loan company sells repossessed cars, it wants to recover enough money to pay off the existing loan balance, plus any expenses for towing and storage and the fees of the professional repo company who picked up the vehicle.

How do I find repo auctions?
There are number of ways to find repossessed car auctions.

One way is to simply calls banks and credit unions in your area and ask how they sell their repo cars. If it's an auction company, they can give you information to locate the company so that you can ask about locations, rules, and schedules.

Another way is to call local newspapers and ask when they publish car auction announcements. There is usually one one newspaper in an area that prints car auction announcements on a specific schedule, say, on the third Friday every month, as an example.

What to pay for repo cars?

Bargain prices are very possible for repo cars, but not always. Banks are willing to take losses on the sale of repo cars but they prefer not to do so, if possible.

In cases where the borrower was not upside down on his loan, the bank may seek to only recover what was owed, which could be much less than the car is actually worth — a real bargain. These are the deals to look for.

In other cases, which is more common, the borrower was upside down on his loan, which means he owed more than the car is worth. Obviously, the bank would like to recover the entire amount owed, but will usually price the car at fair market value, if it's selling the vehicles from its parking lot. However, if selling at auction, they will accept the selling price, whatever that may be. Either way, the bank will usually incur a loss.

If you attend a repo car auction, makes sure you know the value of the cars you bid on. Take a couple of used-car price books with you. Don't get caught up in the excitement of bidding and overpay.

What kind of cars at repo auctions?
There are generally three kinds of cars at repossessed vehicle auctions.

1. Almost new cars in new-perfect condition and with low mileage. The borrower probably just lost his job, got a divorce, or otherwise realized he couldn't afford the car. Bargains can be found on vehicles on which the borrower had made a large down payment.
2. Late model cars in average condition and average miles. The borrower has probably had financial trouble, or a bankruptcy, that made it difficult to continue his loan. Many of these vehicles are available for less than market value.
3. Older model cars in poor condition and high mileage. The borrower was probably financially challenged when he bought the car and things became worse, which caused multiple missed payments. Many of these cars may have hidden problems, which might be part of the reason for the borrowers default.

How to get bargain prices on repo cars

If you find a bank selling it's own repossessed cars, determine the actual value of the car you're interested in by consulting Kelley Blue Book (www.kbb.com) and NADA Guides (www.nadaguides.com).

If the bank's price is higher than the "book value", negotiate with them to lower the price. If the price is already lower, you've possibly found a good deal.

If you attend a repo car auction, go early and inspect the cars you might be interested in. You can usually look over the cars and even start them up, but you won't be able to drive them.

Take your used-car price guide books with you so that you'll know what the cars are worth. Bid wisely and follow auction rules.

It's possible to get some great bargains at repo car auctions. Be prepared to pay for your winnings, or be able to show approved financing.

Summary
Repossessed car auctions can be a source of good used vehicles at great prices, if you know what you're doing and don't mind taking a little risk.

Repo cars are a great source of bargains, created by the misfortunes of people who have had financial difficulties.

For more, see the following articles:   Damaged Cars - Salvage Cars,   Salvage Car Auctions and Insurance Auctions,  and  Reposessed Car Auctions.

For more, see LeaseGuide.com