How to Buy Cars at Auctions

There’s a place where unwanted cars go to be claimed. Unsold dealership cars, cars that have been totaled by an insurance company or left unclaimed in a towing lot, many of them go to the auto auction hoping to find a new home.1

Yet for such a common occurrence, few people have ever been to one before. Most people understand what they are, but how do car auctions work? While some are held indoors, most auto auctions are outdoor events. Cars are lined up in rows with a ring man in charge of identifying bidders for cars in each of these rows. Like in any auction, people place bets and the highest bidder wins. Auctions are great places to find new and used cars for bargains you can’t get anywhere else.2

Who can buy cars at auctions and how to get into one

Yet for such a common occurrence, few people have ever been to one before. Most people understand what they are, but how do car auctions work? While some are If you want to buy from car auctions, you need to know how to get into car auctions. Auctions may already carry an air of exclusivity for many people simply because of their lack of familiarity with them, but this feeling is not completely unfounded. There are two different kinds of auto auction – public auctions and dealer auctions. To place bids at a dealer auction, bidders must have a dealer license. This is also true of particular sections within many public auctions which reserve some vehicles for dealers only. For those sections that are open to the public, however, anyone with the money and know-how to bid is free to do so.3

Do you need a license to buy a car from an auction?

As previously mentioned, there are auctions that do require dealer licenses for participation. If the auction is classified as a dealer auction, or if you’re looking to place bids in a section of a public auction designated for dealers, then you will need a dealer license. If you don’t have such a license, you can apply to your state to receive one. This is a lengthy process which includes providing proof that you are, in fact, an employee or owner of a licensed car dealership and that you meet all the necessary requirements such as insurance for your business and a clean background check.4

How else can I prepare for an auto auction?

No matter how much experience you have with auto auctions, it’s always best to do you research ahead of time so that you’re prepared to find whatever it is you’re looking for (and not overpay for it). If you’ve never been to an auto auction before, this is especially true, since you’ll likely hear and see terms and phrases you’re not accustomed to.

  1. Do Your Research – Check out the catalog beforehand to scope out the offerings you’ll find at the auction. The auction website will be able to tell you if there are any guarantees associated with each vehicle. In many cases, what you buy at the auction is what you get. This is one of the primary risks of buying from auctions, some cars are sold “as is” and their seller will accept no liability for defects you find afterwards. Doing your research thoroughly beforehand will help you ensure that the car you buy is as good as the price you pay.5 If you’re interested in buying a classic car at an auction, that research is all the more important.
  2. Come Prepared to Purchase – If you bid on a car, you need to be ready to buy it if you win! Most auctions will take either cash or check and expect payment to be made within 24 hours of the sale.6 Be aware of other costs you may be responsible for such as transporting the car off site and any auction fees.7
  3. Determine Your Maximum Bid – You don’t want to find yourself in a position where the price of your new car is more than you can afford. Determine your maximum bid before entering the auction and stick to that number like glue to ensure this doesn’t happen.
  4. Bring an Expert – A lot of people have strong opinions about cars, but few of them are qualified enough for those opinions to count. If you know someone who is a mechanic or other auto industry professional, try to bring them with you to the auction. They’ll be able to manage your expectations and steer you away from bad choices.
  5. Go Spectate an Auction First – It’s helpful to learn how an auction operates without the stress of trying to buy. When learning how to buy cars at auction, watching one as a spectator can give you a good idea of how quickly sales are made and how the auctioneer interacts with bidders.8

Taking the next steps after your purchase

You’ve done your research, you’ve gone to auction, and you’ve won yourself a new car. Payment has been made, so now what? After you’ve filled out your share of the paperwork, you’ll have to wait on your state’s DMV to issue you a title for the vehicle. This will usually take less than 30 days. You can purchase a temporary tag if you need to be able to drive your new purchase sooner, but otherwise you’ll have to have the car towed off premise to your home or business.9

Insuring your new car is also a crucial step to take. Depending on the history and current condition of the car you buy, some auctioned cars may be more difficult to insure than others. Some auction cars are brand new, but others are salvaged and rebuilt, making them more of a question mark with insurance companies. It’s best to talk to your insurance company about the specific car you intend to buy first.10 Get a free quote from Nationwide today and start learning how you can save on the auto insurance you need.


[1]https://www.autoauctionmall.com/learning-center/where-do-cars-sold-at-auction-come-from/, Accessed September 2021.
[3]https://www.autoauctionmall.com/learning-center/can-anyone-go-to-car-auctions/, Accessed September 2021.
[10]https://www.autoauctionmall.com/learning-center/can-i-insure-cars-bought-from-auctions/, Accessed September 2021.
The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Nationwide Mutual Insurance Company, its affiliates and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided.
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