• Cars are cheap – In many cases, they are more affordable than their resale price in the market. In auctions, you’ll also come across salvage title cars, which are incredibly affordable. These vehicles are usually deemed more expensive to fix by the insurance company, but some of them can be in good running condition again.
When it comes to cars, there’s good news and bad news. The good news is the market remains to be competitive. Today you can take a pick from trucks to electric cars. There are a lot of new and great brands, as well as models. The bad news is new ones remain pricey. While you can always apply for financing, the interest still costs you more money in the end. So let’s get back to the good news, which is you can buy a well-known vehicle at a fraction of its original price in auto auctions.
What Is an Auto Auction?
There are different types of auto auctions available, but the concept remains the same. You will bid on the used vehicles you wish to buy and then win to get them. You will come across a wide variety of them: cars, trucks, buses, government vehicles such as ambulances, trailers, motor homes, vans, motorcycles, and even boats and yachts.
Auto auctions offer many benefits to buyers:
• Cars are cheap – In many cases, they are more affordable than their resale price in the market. In auctions, you’ll also come across salvage title cars, which are incredibly affordable. These vehicles are usually deemed more expensive to fix by the insurance company, but some of them can be in good running condition again.
• Cars come in various models – In auctions, it’s not impossible to get a 2016 model for at least 25 percent less than its book value. Moreover, during an auction, you can bid on as many cars as you like, so you have more chances of buying your own. You can also get to see different types in one day.
• The process is straightforward – It’s really just bidding and winning. If you win, then you submit the other requirements, pay the amount and other fees, and get your vehicle.
• It’s fun – Auctions are entertaining and exciting, and the enjoyment can be one good reason to try it even once in your life.
What Does It Take to Join an Auction?
Perhaps by now you’re already thinking about getting your used vehicle through an auction. That’s awesome! But do you have what it takes to join?
1. Age Why does age matter in an auction? This is because you need to sign documents such as agreements and contracts. Age may be a simple factor, but it’s not as laws can differ among states. Usually, minors can enter into contracts, but since the state assumes they don’t have a sufficient capacity to decide, they may void the agreement in certain cases. Some may follow the legal age of majority, which is usually 18 years old. Car rental companies accept customers who are at least 21 years old.
2. Business License In the United States, many of these auctions are open for dealers only. These are people who are in the business of buying and selling vehicles. To do that, you need to have a business license, the requirements of which can vary among states. Many factors affect the kind of dealer’s license you’ll get. There’s the wholesaler license. It is given to people or companies that are in the business of offering vehicles to smaller or retail dealers. You may also hold a license as a broker. The broker buys or looks for vehicles on behalf of the customer. You also need to undergo a background check, submit a business plan, or meet a minimum number of vehicles to sell within 12 months.
3. Money Obviously, you need money to buy a car, but you also have to spend on other things. One, you need to pay for your entry. Second, the auctioneer may charge additional fees or charges to process the transfer and vehicle to you. If you cannot drive yet, you should spend for the vehicle transport.
4. Bidding Account This is necessary if you are planning to join an online auction. It is an account where you can display your profile, licenses, and other requirements.
5. Broker Some auctions can accept individuals for bidding, but they may do so only with the help of a broker who can bid on their behalf.
6. Clean Record at DMV Before you can get your business license, DMV performs a background check. They need to make sure you will follow the rules to ethical used car selling. A bad record can ruin your chances of having one.
Kinds of Auctions
The people who can attend the bidding can also depend on the type of auction:
• Public – As its name suggests, the auction is open for everyone, not only car dealers. It usually occurs when it’s a government-based program. Different agencies or departments, such as healthcare or police, sell their old assets to grow funds. They can also sell impounded or seized vehicles. Public auctions may also happen through the efforts of private organizations like banks. These institutions do not sell cars (they finance vehicles). In cases when owners cannot make any more repayments, lenders repossess the cars and sell them in auctions to dispose them quickly.
• Private – This can be by invitation only. It may be the auto auction attracts only specific crowds like collectors of vintage cars or lovers of Hummer.
• Dealers Only – The auction house may request you send your business licenses, as well as other related documents, in order to sign up for the event.
• No Dealers License – This is an auction where you can buy your preferred cars even if you don’t have a dealer’s license. However, some auctioneers may request you do so through a broker. You also need to refer to your state law to know how to buy a used vehicle without a business license.
• Online – There are two ways to do this. One, the entire auction happens online. At a certain time, listed vehicles can be seen, and buyers can begin bidding. The site may require a minimum bid. The bidding process closes within a few minutes, and the winning bid gets the car from the office of the auctioneer so it can process papers. The other way is to hold an initial auction online and continue it in real time.
When in doubt whether you’re allowed to join an auto auction, ask the organizers and your state.
