Car auctions have a mystery about them that can be addictive. There is always a rush when a car is being offered up for auction to the highest bidder. Especially when there are a couple of bidders involved in a “bidding war”, there is plenty of adrenaline flowing. It’s a known fact that you could pick up a real bargain at an auction, or you could leave with a lemon. Either way, there are some must do’s to make sure you are well prepared for any car auction.
Here are a few pointers on how repossessed car auctions work:
Pricing of cars at auctions
The reserve (minimum bid) price is only based on market value and not the amount owing on the repossessed car. Reserve prices tend to be up to 20% less than retail value. The closer the reserve price to the trade value, the better the condition of the car.
Registration at auctions
Remember to register at car auctions using the following documents:
- Relevant company registration documents
- FICA documents: ID’s/Driver’s License of proxy’s and proof of residence, no older than three months
- A refundable registration fee of between R5000 and R6000
- Business letterhead/affidavit authorising individuals to bid on behalf of the business with details of their names
Don’t default on a successful bid
If you make a successful bid on a car, follow through with buying it or stand the risk of losing the car. You stand to gain if you choose to buy the car, as the deposit will be deducted from the final selling price.
The auctioneers take a commission and add VAT to the selling price
Auctioneers charge a 6% commission that is added to the selling price. Those top-bid prices don’t include the 14%VAT. Remember to factor this into the ultimate selling price, when bidding on a car.
The auctioneers don’t provide a guarantees
The auction houses provide no level of guarantee on any vehicle sold at auction. However, many repossessed cars still have a certain amount of warranty and/or maintenance plan coverage that still applies to the vehicle, as guaranteed by the manufacturer at the time of its original sale.
Viewing days are held before each auction
Make use of the viewing days usually held a day or two prior to each auction, to give you an idea of what cars are available. If there is a car that you are particularly interested in, then note the VIN number and research that particular car’s history.
Before you start bidding, attend a few auctions
All the major auction houses recommend that you attend a few auctions to see how they work. This is in the interest of preventing the well-known syndrome of “buyer’s remorse”.
Do your homework
Before visiting the auction house, decide on the type of car you want to buy and do your research online on market-related pricing. This will give you a great idea of what current retail selling prices are, for the particular car you have in mind. Then do similar searches on competitive models of the same model year, and see whether they hold their value better or worse than the car you have in mind.
