It seems like more and more repossessed property is being put up for auction than ever before, leaving people wondering: is it a good idea to buy a repo vehicle? In today’s harsh economic climate, people are increasingly unable to afford the car they once could. This means defaulting on car instalment payments that can eventually lead to the bank or other lending institution repossessing and reselling the vehicle. This can also happen if the car was used as debt security.
Buying repossessed vehicles is a great way of finding good used car deals. Repossessed vehicles are often sold at very competitive prices as the bank is not concerned with selling the vehicle for a profit; they just want to get back any money they have lost as soon as possible. In fact, bank repo cars are often sold for under 30% of the original face value of the car. If repossessed cars sell for significantly lower prices, is it a good idea to buy a repo vehicle? The immediate answer may be a resounding “Yes!”, but there are also some limitations and risks when you buy a repossessed car. Let’s look at some of the pros and cons associated with buying repo vehicles:
Pros of buying a repo vehicle
- You can save a lot of money as a similar or equal car sold through a dealership may sell for a much higher price.
- If you buy a repossessed car at a very good price, you have the chance to sell the car privately and make a profit on your purchase.
- Buying on auction can be a fun and exciting process.
- If a bank is selling off repossessed cars, there will often be an on-site car finance provider at the auction who will be able to assist you in buying your car. Because the bank wants to get rid of the car quickly, it may be easier to get on-site finance than it would be for another car purchase.
- Unless the car was purchased by the private owner second-hand, the car shouldn’t be too old. The reason the car was repossessed would likely be that the owner defaulted on payments, meaning that the car hadn’t been paid off and can’t be all that dated.
Cons of buying a repo vehicle
- Repossessed cars are no guaranteed to be in good shape and don’t come with the same stamp of reliability as do dealership-bought cars.
- The cars cannot be test-driven before you buy them. This means that you won’t have the chance to notice any defects or to see how you feel driving the car.
- You probably won’t be given a warrantee, service history, or other protective measures that a dealer may provide.
Tips for buying bank repo vehicles
- If you decide to go ahead with buying a repossessed vehicle, consider visiting an auction without the intention of buying do that you can see how it works and will be better equipped when it comes to making your own purchase. Once you have been to an auction, you will have an idea of how much you should be paying for cars sold on auction.
- Always do your research on the car you are interested in – look at similar sales to see what you should be paying for it and also be sure to inspect the car thoroughly before you decide to bid on it. Check for any interior or exterior damage. If you don’t know much about cars, it is best to bring along someone who does so that you know what kind of condition the car is in.
Essentially, buying a repossessed vehicle is a gamble, but if you do thorough research on the car you are interested in you will avoid wasting your money. Many repossessed car sales are too good to give up, so it really depends on the car and how much is being charged for it.