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1. Many bank repossessed cars are newer makes and models.
A common assumption is that all repo cars are old clunkers that have been overused and abused and are ready to fall apart. However, that is not the case. Many car repossessions happen on new luxury cars that come with higher price tags and monthly payments. An owner may take out a larger loan than they can afford or some financial hardship may affect their ability to stay
current. It is much easier to manage lower amounts or to catch up later when money is tight than with the high payments on nicer, newer cars. Since new cars depreciate so rapidly, it is hard to sell them for the amount still owed on the loan, making them more likely to end up repossessed.
2. Bank repossessed cars are often in good condition but not always, so inspect carefully.
While many are in good or great shape, there will be some that look okay but have some major mechanical issues. There will usually be a preview time where you can turn the car on and look under the hood to help you spot those problems before you bid. While a car that needs a little work will likely go for less, those that need too much are usually not worth it once you figure in the cost of all the repairs. Unless you are looking for a project, it is better to pass on those.
3. Not all cars at repo auctions were actually repossessed.
It is not uncommon for vehicle auctions to mix where the cars came from. It may be billed as a repo auction, but there could be seized, salvaged, surplus and vehicles from other sources mixed in. If you can find out where a car came from, that will give you a good idea of what problems it might be hiding and its likely condition. Salvaged cars are the ones to be the most leery of since
they were often in a major accident or flooded and the previous damage may continue to affect the car even if it looks like it was all fixed.
4. While most experts say not to bid more than trade-in value, sometimes that is too much.
Using the trade-in value is a general rule of thumb, but that can be too high a bid for many bank repossessed cars. You need to take into consideration how many things need to be fixed and how much that will cost and lower your highest bid accordingly. Used car guides are intended to be general guides and may not accurately reflect values in your area, something you should
definitely be aware of if you plan on reselling the car for a profit.
5. The starting bid is not always an accurate predictor of the winning bid.
The winning bid will be whatever someone is willing to pay for the car regardless of the price it started at. Each bank repo car will have its own starting bid. Sometimes these are set artificially low to attract more interested bidders. Other times there are just typical assigned beginning amounts based loosely on the car’s condition and value. A car with a higher start bid can sell for much less than one with a lower beginning bid. Some cars will sell for just over that first amount while others will end up going for thousands more.
A Guide to Repossessed Trucks