If you don't have a lot of money but need to buy a car, you might be able to find a cheap car that has been seized or repossessed. Car companies want to resell the cars they repossess or the cars will turn into losses for their company. Cars are seized or repossessed when the owner fails to make loan payments. The car is taken away from the owner and could be sold at a discount price to you. If the car sells for more than what the previous owner owed, the previous owner will receive the monetary difference. If the car sells for less, the previous owner would have to pay the difference.
- Skill level:
- Moderately Easy
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Check out how local auctions work. Make sure they are open to the public and not just dealers. Learn the rules for participating in an auction. Get the dates and times; some auto auctions are even listed in local newspapers. Listed in the Resources section below is a link to the government's car auctions site.
Call dealerships to see if they have any repossessed cars on their lots. You could avoid paying an auctioneer and buy right through the original dealer.
Call around to local banks and see if they are offering sales on any cars. This will avoid the cost of the middleman, the auctioneer.
Inspect the car you wish to purchase. Most times, if there are defects, the dealership will not bother fixing them and will sell the cars "as-is." This means you will be responsible for fixing anything. Brush up on some car mechanics or bring a friend that has the knowledge. At the minimum, check the exterior for rust, welding marks and any paint that does not look original. Perform other inspections by turning on the engine, checking the oil and transmission fluid levels and textures, and check under the seats and in the boot for water. In addition, test drive the car before making an offer.
Make an offer on the car. Most prices can be negotiated.
Tips and warnings
- Go to the dealership, bank or auction prepared to buy with the acceptable form of payment.
- Some auctions provide 90-day warranties on their cars.
- Be cautious when listening to the dealer talk about the condition of the car. Always make your own inspections or have a mechanic inspect the car before buying.
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