30 August 2022 Concept Car
Thanks to eBay, almost all of us have participated in an auction at one point or another. Perhaps you’ve bid on CDs, books or clothes. Or maybe you’ve even bought something more expensive. Like jewelry or an exclusive piece of furniture or art.
But buying a car at an auto auction? That’s something different entirely.
Still, auto auctions are quickly gaining in popularity. According to the Money Advice Service, close to 1.5 million cars are sold at auctions in the UK each year. Compared to the total sales of used cars (around 8 million), that’s still only a blip. But it’s an impressive number nevertheless.
So should you join the ranks of those flocking to auction houses in search for a car? In this special, we’ll help you find out.
We started the article with a reference to eBay. So before we go any further, we should perhaps spend some time investigating the difference between an online and an offline auto auction.
Is it better to buy at eBay or one of the hundreds of physical auctions across Britain? That’s not an easy question to answer. We think of them as the same thing. But in actual fact, they are very different experiences.
Although eBay has done a lot to improve the tainted image of auctions, it doesn’t really feel like one:
Obviously, there are also some overlaps. Online and offline auto auctions can yield both highly attractive and far too high prices. They create the same kind of suspense and rush of blood to the head, which can make them dangerous. And with both, you can not be sure you’ll actually get the car you want or walk away empty handed.
Usually, too, you won’t be able to test drive or properly inspect the car prior to purchasing it. This is called buying as seen. At an auto auction house, you will at least be able to see the car from the outside. And in some instances, you may be granted five minutes on the inside or you may be able to look underneath the hood.
On eBay, on the other hand, the sellers tend to carefully document the condition of the car with photos, close-ups and additional information. This is very helpful indeed, sometimes more so than standing right beside the car but not being able to go for a test drive.
Our general recommendation: If you’re looking for a car and want to give auctions a chance, it would be foolish not to take both options into consideration. But be careful either way.
Ask anyone participating in an auto auction for their reasons, and you’re likely to get the same answer each time: because it’s cheap.
We all dream of the perfect deal. Of finding the car of our dreams at a mind blowing discount. But dreams rarely come true. And in the case of auctions, that is probably going to be the case.
Here’s the thing: Auctions were not invented for people like you and me. They were founded to provide a service to car dealers and car dealers only.
So they need to constantly update their showroom with new offers. One way of doing this is to buy cars off private sellers through part-exchanges. But this is time-consuming and slow and never generates the kind of selection that is required.
Auto auctions are the best possible way to buy a lot of used cars at reasonable prices. Most of these vehicles will be in a decent condition. And if a dealer should get unlucky and buy a below par model, they can usually get it fixed at their own garage.
For this reason, auto auction houses can charge quite high handling fees. To car dealers, these fees can be passed on to their customers. For private buyers like yourself, however, they make participating in the auction a lot less attractive.
There’s another reason that auto auctions are rarely a lot cheaper than buying at a dealer: Sticker prices don’t mean all that much.
Even if you’re really bad at haggling, you should usually be able to shave off a few Pounds off the sticker price. Chances of this happening are better for a new car. But it’s just as possible with a second hand model.
Let’s say you can get a car at an auction for £1,000 less than at a dealership. First, you need to apply all the different fees, which can amount to a few hundred Pounds. Then, you need to consider that you can get a discount off the sticker price of around £300. As you can see, the difference between the two will quickly melt away like ice in the sunshine.
Add to that the fact that you enjoy a lot more protection at a dealership. You should be able to test drive the car, for example. (To understand the benefits of test driving a used car, see our blog post on the topic) The closer you look, the more an auction will typically lose its appeal.
Whether or not an auto auction is cheaper than buying used at a dealer depends on a lot of things. We’ll get to those in a moment.
If you’re serious about buying your next car at an auction, you need to come prepared. Part of that includes knowing about the procedure. It may vary slightly from house to house, but in general, this is what a day at the auctions will look like:
As you can see, the process is simple enough. Still, there are plenty of potential problems, which you’ll need to know about.
We have got used to lavish consumer protection laws. When you’re buying a car from a dealer today, you can expect a warranty, protection against fraud and many more. You can also rely on dealer to allow you to test drive the car and to have it thoroughly inspected by a third party. All of this significantly reduces the risk of the transaction.
None of this applies to an auto auction. The auction house does not take responsibility for any technical problems. It just acts as a middle man between the seller and the buyer. In fact, your protection is even less than that, as you don’t have any means of contacting the seller. Once the car is yours, it’s truly yours and you’ll have to deal with it.
Obviously, it may be worth the trouble, if you can get a really great deal. But you need to be aware that you may just as well commit the biggest mistake of your life.
An auto auction is the Wild West of car sales: You don’t get to properly inspect the car. You don’t get to test drive it. Descriptions of its technical condition tend to be vague. And if you should experience any issues after the auction, you will have to deal with them all by yourself.
Auction houses dress up this somewhat dire situation under the far nicer term of ‘buy as seen’. Essentially, this means that the visual impression of the car determines what you’re getting. You can not access the parts of the car that are ‘unseen’, these will only become apparent once the vehicle belongs to you.
It takes a lot of experience to draw meaningful conclusions from the way a car looks on the outside to what it is like on the inside. Or at least it’s a lot harder than you might think. And even the experts get it wrong at times.
Buy as seen is the biggest problem with an auto auction. As long as you’re buying a fleet car, your chances of getting ripped off are very slim. But a risk remains nonetheless.
If you feel uncomfortable with this lack of protection and wish for an extended warranty, you’re probably better off with a regular used car deal.
Auctions feed off the excitement a bidding war creates. Some of us are more susceptible to this than others. But even the most cool and emotionally balanced among us can get carried away in the heat of the moment.
The thing is that this tension can be fun if you’re bidding for something as innocent as a CD. But a car is something entirely different. Here, going over your price goal can have far deeper consequences. Entire livelihoods can be destroyed in the last minute of an auction!
Professional car dealers don’t usually have this problem, because they arrive at an auction with very clear targets. But even they will sometimes pay more than what they planned or what the car may actually be worth. Now imagine how difficult it will be for you, as a first-time or occasional bidder, to stay calm!
Auctioneers at professional auction houses have very high standards they need to adhere to. And yet, their job is to get the highest possible price for a car.
To do this, they can use subtle psychological encouragement through careful wording and trying to encourage those present to put in a higher bid.
There is also something called ‘off the wall bidding‘. This is legal, but will push prices up. Imagine you want to bid on a car which has a reserve of £5,000. Now, if you just bid £3,500 and no one else is bidding, you may think you’ve made the deal of your lifetime.
However, since the seller has set a reserve of £5,000, you wouldn’t actually get the car. Instead, the auction would end without the car being sold. Instead of that happening, the auctioneer will now invent a bid to get the ball rolling again.
He could, for example, suggest a price of £4,000. If you are prepared to pay that much, you could continue the bidding with the auctioneer until the reserve price is reached. Only then will the car truly belong to you.
Off the wall bidding is not only legal, but sensible. But it does mean that you’ll very rarely get extremely cheap deals.
We pointed out earlier why auto auctions are rarely as cheap as they are perceived to be. The most important reason for this is that there are multiple fees which all drive up the costs after you’ve won the auction:
Despite all these disadvantages, people continue to go to car auctions. In fact, they are increasingly doing so, to the point that some worry auctions may suffer for it. If you want to jump on the bandwagon as well, then at least make sure to follow a few basic precautions.
In the end, you can still find a few good deals at auctions. And one of the serious benefits is that you can avoid unpleasant conversations and all the hassle that comes with buying at a dealership. In fact, an auction has a nicely impersonal feeling to it, that many actually prefer.
And contrary to an eBay auction, you can wrap everything up in a few hours, instead of spending weeks hunting for a suitable vehicle online.
So, here come the most important guidelines to follow for anyone interested in a car auction.
As with anything, you get better at things with experience. This is very much true for buying a car at a dealership, since haggling, too, is something you can learn.
It is even more vital when it comes to auto auctions, however. Auto auctions are very fast and follow a strict protocol, so you need to acquaint yourself with that before it makes sense to engage with the process for real. Also, the auctioneer is often quite hard to understand, so you may need to familiarise yourself with his voice and delivery first.
Even more importantly, the more time you spend at the auctions, the better you will be able to separate the wheat from the chaff. What appeared to be a great deal on your first visit can suddenly look like a mediocre offer at best.
There is no general rule here. But we’d say that you should at least spend three days at an auction house before committing yourself for real.
Not all auction houses were created equal. Today, each one specialises in something different. Just like sellers should aim to go through the house that is most ideally suited to their needs, so should you.
This specialisation relates both to the price category and the body type of the car you want to buy. So depending on whether you’re looking for a classic car, an SUV or more of a transporter, you may have to visit different auction houses.
Importantly, if you’re a private buyer, we strongly recommend using one of the bigger auction houses. Although some of the smaller ones may have better conditions, it’s not easy to distinguish the serious from the problematic ones. It’s your money which is at risk here, better play it safe.
BCA / British Car Auctions are a good starting point for beginners.
We live in the age of information. And so, without the necessary know-how you can only go wrong at an auction.
Before you even set foot into an auction house, you should therefore …
No day’s the same at the auction house. As seasoned professionals will tell you, the exact same car can fetch vastly different prices on different days. You will never be able to predict which way things will go with 100% accuracy. But you can at least get a better understanding of when the best time to bid is.
For one, Winters tend to be better than Summers. This simply follows the rule for car buying in general. People are in a better mood for buying when it’s warm and they prefer to drive into their holiday with a new car. Car sales are generally slower in the Wintertime, so you should be able to get a better catch then.
Secondly, the afternoon sessions mostly yield lower prices than the mornings. By this time, many dealers have already fulfilled their mission and have left. So it’s more quiet, with less professional buyers present. This can help you achieve a better deal.
If you follow our first rule and visit the auction house a few times prior to bidding, you can get a better sense for the days with higher and those with lower prices.
Knowing how much you can spend should probably the first thing you should do when considering an auto auction. But what good is that if you don’t stick to the plan?
When bidding for a car, consider your budget as holy. Never exceed it, not even if it’s ‘just’ £50. Auctions are fast and before you know it, those £50 will have turned into £250, £500 or more. Suddenly, you’re well beyond what you can afford.
The thing is: Once that hammer comes down and you’ve made the final bid, you’re responsible for getting together the money. If you can’t, this spells a lot of trouble for you. But even if you can pay for the car, don’t forget you still have monthly obligations for maintenance and insurance to deal with.
So set your budget a little too low rather than too high and never ever exceed it. Most importantly, be prepared to walk away if things get too heated.
When you’re at an auto auction, you’ll see an endless flow of cars passing you by. This can create the impression that they’re all coming from the same source. Nothing could be less true.
One of the first things a car dealer will look at when checking out a vehicle at an auction is who the previous owner was. Generally speaking, these cars will mainly come from four sources:
The Used Car Guy has made a compelling case against buying privately entered car and in favour of fleet models:
One reason you will want to do this is that, as we mentioned before, the auctioneer can be exceedingly hard to understand. The acoustics and often pretty bad sound systems of most auction halls is partly to blame for this. The sheer speed of an auction is another factor. Be it as it may, you’ll need to sharpen your eyes to catch the current bid and the state of the auction.
But you should also make sure to tune in before the bidding even begins. During the introduction, which will only take a minute or so, the auctioneer will read out aloud the relevant information for this particular car.
This information has very important details about the state of the car.
Auto Express has summed them up thus:
• “‘No major mechanical faults’ – indicates the car should not have faults with engine, suspension, drivetrain or gearbox.
• ‘Specified faults’ – the auctioneer will read out the list of faults, pay careful attention here.
• ‘Sold as seen’ – the vehicle is sold with any of the faults it may have, the auction house will rarely accept any complaints about the mechanical or cosmetic condition of these vehicles after sale.
• ‘Sold with a warranted mileage’ – the mileage has been verified by an independent inspection and the car is sold on the basis of the report.”
Make sure to understand the specifications for the car you’re bidding at. These will determine your rights should anything go wrong later on.
These days, buying at a dealership can be a pretty relaxing affair. People will take their time for you, answer all your questions, explain the paperwork and there’s usually complimentary coffee, which tends to be pretty good.
Buying at an auction in comparison feels like a course in speed dating. The faster the auctioneer can get you to buy and leave, the better it seems. And afterwards, there’s no remorse when it comes to your financial obligations.
Regardless of your financial situation, you will need to pay a 20% deposit straight away. You need to pay this using one of the accepted payment methods. Some auction houses actually require you to pay this deposit upfront. So if you make the purchase, it will automatically be added to your balance. You will also need to have your payment details at hand.
We tend to think it isn’t. There are better ways how you can buy used cars and save money. But ultimately the choice is yours. One thing’s for sure, however: Many people with a bad credit rating think that auctions are great because they don’t require a credit check.
In reality, this only makes things more dangerous. The smaller your budget, the bigger your chances of exceeding it.
At CCC, we have made it our task to help people with bad credit. Before taking on the risk of an auction, visit us first. Not only do we have a great selection of current cars at excellent prices. We can also offer you finance even if your budget should be rather small.
Talk to us, we look forward to hearing from you.
30 August 2022 Concept Car