What do you need to know before buying a repo car? Well the first thing you may want to know is what exactly a repo car is. A repossessed car is a car that has been taken back in to possession by the banks as a result of the previous owner defaulting on their repayments. As a result, the car is being sold by the bank for a much lower price than you would be able to get it from a dealership. This therefore presents an opportunity to those individuals who have the funds available to afford the car as they will be able to purchase the car at a great price.
There are however some issues that need to be raised on the topic of “What do you need to know before buying a repo car?”
The issues are as follows:
1. Repo cars are sold as is. This means that the banks are not responsible should there be any fault with the vehicle that you find after purchase. It is therefore imperative that if you do not have a strong knowledge of vehicles and how they work, that you either take a qualified mechanic or auto electrician to inspect the vehicle before you purchase. This way you will safe guard yourself against any surprises. Should you be a person who knows a lot about cars, then you can often find repo cars that aren’t in the best condition for ridiculously low prices which can be bought in order for you to repair them.
2. Repo cars are normally sold at auction. This means that you need to be registered with an auction house in order to attend an auction to purchase one of the cars. The majority of auction houses require a registration fee which they use as a deposit for the vehicle you are looking to purchase. The reason they do this is to safe guard themselves against people getting caught up in the auction atmosphere and then winning the bid on a car that they cannot actually afford. However, should you win the bid and have the capital or the vehicle finance approved for the vehicle you wish to have, the auction houses will reimburse the deposit to you.
3. The previous owner has no way of knowing who the new owner of the car is. So if you are worried that the defaulting previous owner will try and get their car back you do not have to worry. Once the car is in the possession of the bank, the previous owner has no claim to the vehicle. The reason for this is that before a car is repossessed, the bank allows the owner to try and find a way of getting the money owning. For example, they can sell the car them self to another buyer or they can find the money through other means.
4. Repo cars can also be purchased from dealerships. Many car dealerships purchase these repo cars from auctions in order to sell themselves. The catch with this is that the cars will be sold with a mark up as obviously the dealership needs to make a profit. However, this eliminates the “as is” policy as the dealership is required to make mention of any defaults that the car may have before selling it to you. Should they not disclose this information, they can be taken to court as the Consumer Protection Act requires a full declaration of any problems before anything is sold to another person.
Generally the best thing to do when looking to purchase a repossessed vehicle is to contact your bank and ask them for a list of all of the cars that they have in possession.