If you're looking for a new or used vehicle, you might consider buying a repossessed vehicle or an automobile taken back from the lender. This process is fairly straightforward however can be simpler, by understanding a few key elements of purchasing a repossessed vehicle.
First a repossessed vehicle is the result of a person unable to make payments on a car loan. A bank or lender, giving the loan to the owner made several attempts to contact the owner of the vehicle to make payments. When payments are delinquent, the bank or lender goes out and gets to vehicle back or the owner returns the vehicle.
When considering the purchase of a repossessed vehicle, any number of auctions and lending institutions has an available inventory. Typically, large lenders hire an outside agency, to auction hundreds of vehicles in one venue. This is the auction houses business, and lenders rely on making a small profit after auctioning new cars and used cars. Find an auction by looking in local print or doing an online search. Another method, of finding repossessed cars, is to contact local banks. In smaller communities, banks are typically aware of any existing inventory. Banks are normally happy to earn a bit more on the sale of the vehicle. The lenders percentage of loss is lower when using this method of selling recovered autos.
It is ideal for customers, purchasing a repossessed vehicle, to have some knowledge of auto mechanics. If the purchaser has no mechanical ability, it is vital to find a trustworthy mechanic to take along. Paying a mechanic, to come to an auction, is likely cheaper than a down payment at a traditional dealership. Repossessed vehicles can go for as much as 80% under the appraised value; however it is still necessary to have a basic understanding of how the car runs. An auto is sold in current condition, meaning the buyer will pay any future repairs. This is something to seriously consider when understanding many repossessed vehicles parallel a foreclosed home. If owners fail to make payments, it is likely that an oil change or fixing damage might be unaffordable. Other circumstances might include an owner who becomes aggressive upon finding out they are losing a vehicle. This might include causing damage to the vehicle. For this reason, many vehicles at auction are simply sold for auto parts.
When actually bidding on a repo, remember to carry a price index for vehicles, typically sold at any discount store. Have an idea of what typical values are on a specific car, quote the price according to existing damage, and move forward with bidding appropriately.
Remember purchasing a repo is much the same as purchasing a car within the confines of a traditional dealership. Any auto loans, or necessary cash, must be in hand prior to purchasing the auto. In addition, a copy of current car insurance should be available. If current auto insurance was taken out on a previous vehicle, coverage should be current until you contact your agent. Discuss this with an insurance agent to verify coverage and any existing grace period.
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Chris Robertson is a published author of Majon
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