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Buying a car at auction - is it really worth doing?

Buying a car at auction - is it really worth doing?
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Last week, Wisely SOLD were asked by a client to assist with the purchase of a car, something we are always happy to do through our wiseENACT service. 

Our client had made a shortlist of cars for sale privately (more on that later) but also wanted to attend an auction in the hope of finding a bargain, a temptation which leads to 10% of purchases at car auctions being made by private individuals.

It was the client’s first time attending a car auction, so it was important for them to consider these 5 golden rules:

1. Do your research 

The internet has made it easier than ever to find the right car(s) at auction, without even leaving your desk. Both British Car Auctions and Manheim now have swish websites with comprehensive search tools that private individuals can log into for free. These let you concentrate your efforts on cars which fit your criteria. On days that suits you. At a convenient location.

BCA’s online “Vehicle Search” tool goes one step further by providing a comprehensive “Condition Report”, which provides plenty of photographs, gives each car an overall grade and highlights any notable imperfections. Detailed information about owner, MOT and service history is usually given too. If that's not enough, BCA have teamed up with The AA to offer “BCA Assured”, a 30 point mechanical check which offers further insight on many of their cars. It also offers some ‘comeback’ should something be found to be misreported within 2 days of purchase.

Tip: Cars in the UK are usually covered by a manufacturer warranty for at least 3 years from registration. Auction houses generally don’t offer any kind of warranty, so stretching to a car that is still covered by its manufacturer warranty will give you additional peace of mind. 

It’s best to find a day that has at least 3 or 4 cars of interest. Not only does this give you more choice on the day, it can also mean that there will be less competition for each car, potentially resulting in a lower hammer price and a better deal.

2. Come prepared

Bring your driving licence, a utility bill and a payment method (a debit card will keep things easy and avoid charges). Its also worth getting some insurance quotes in advance to save time on the day and to avoid any unwanted surprises. Remember, once you’ve won a car you are legally obliged to buy it.

Arrive as early as you can and budget about £5-10 to buy the auction catalogue, which gives the running order for the day. Whilst you can do without this if you’ve just come to see a single car, there are often more than 1 rostrums operating at any given time so it can be difficult following an auction without a catalogue.

Tip: Once you’ve located your cars and have have time to spare, try conducting a few ‘dry runs’ on earlier cars. Right from the moment the cars are started and are being driven towards the rostrum (usually about 5-10 cars in advance), you’ll quickly learn what you should be looking out for just by studying other (potentially professional) buyers.

3. Know the costs

Its crucial to keep in mind the total purchase price, and to derive your maximum bid by working backwards from the total you are prepared to pay. Each auction provider has different fees and these are found on their websites. It's important to study these carefully to ensure you don’t pay more than you were expecting.

Our client had a maximum budget of £15,000 and was able to pay by debit card, avoiding the % fees that apply when using a credit card or paying in cash. As such, the only fees to factor in were a £26 inc vat DVLA Notification Fee and the variable Standard Buyers Fee. More info on the latter can be found online and all around the auction hall on the day. With the fees in mind, the maximum hammer price our client could entertain was £14,262.

Tip: Make sure you have made provisions for insurance and Road Tax to drive away any potential purchase on the same day. Not only does this save you having to return another day, storage fees are often charged if a car isn’t removed within 24 hours. If you find yourself in a logistical pickle, delivery is an option. We were quoted just over £1 + vat per mile, which is really quite reasonable.

Note, auction fees do vary and the fees described above reflect the BCA auction we attended.

4. Set your budget, and stick to it

Once you’ve identified a selection of cars, found them on display and inspected them, it's time to set your price. Keeping in mind the fees, the best thing to do is to set your maximum price before the bidding even starts. The hard part? Sticking to it and being prepared to let a car go! Just keep in mind you set your figure for a reason, without being influenced by the buzz in the room.

Tip: Put plenty of thought into deciding what you’re prepared to pay. At the very least, you should use portals like Auto Trader and Pistonheads to see what similar cars are selling for and use these to gauge what would represent good value. Sites like Parkers offer tailored guide prices for a small fee (currently £3.49), but keep in mind these are just guides and can often be quite inaccurate/optimistic.

Bidding happens quickly, but is an exciting event to take part in. Keep your eyes on both the auctioneer and the screen to ensure you know exactly what’s going on, and keep your maximum budget in mind at all times - you’d be surprised how easily it can be forgotten in all the excitement!

Success? Just remember to make your way to the rostrum swiftly to pay your deposit.

5. Have a back up

Don’t end up bidding over the odds on a car just because there aren’t any other options. The best thing to do is to focus your efforts on several cars, ideally a wide range of makes and models. Even then, you might find the day drawing to a close and yourself left empty handed. This is why it's always best to have further options lined up, be it another day at auction and/or cars for sale elsewhere.

Going to auction with a “must leave with a car” mindset is not a good idea, and is easily avoided by highlighting plenty of potential cars, not booking one way transport and by not choosing an auction that is very far from home

How did it go for us?

The cars we had identified went for above the prices we had set, to such an extent that some of the like-for-like cars in the classifieds (both private and trade) appeared to offer better value. Of course, each day at auction is different and there were definitely some excellent deals to be had, just not on the cars that our client had picked out.

What happened next...

With no luck and no time to come back another day, our attention turned to the shortlist of private cars the client had been considering. After running comprehensive background checks, several were quickly dismissed and 2 seemingly genuine cars were honed in on.

Our client instantly fell for the first car we went to see - a low mileage, HPI clear example which was priced attractively and only had 1 previous owner. On paper, it was a winner. Unfortunately, our experienced eyes quickly spotted small overspray marks on the front headlight clusters which lead to finding further evidence that the car had been involved in a front end collision. Sadly, it seemed this was also news for the seller, who had bought the car a year earlier in good faith without having it inspected.

(We’ll be addressing everything there is to know about buying cars privately in a future article, stay tuned!)

On inspection the second car ticked all the right boxes and was found to be perfectly genuine. A deal was negotiated with the seller and the whole transaction was mediated by Wisely SOLD to ensure everything was carried out correctly, from payment to DVLA matters - a welcome helping hand for both parties. More information on how our £199 wiseENACT service can help private sellers (and buyers) can be found here.

So should I consider buying at auction?

In short, yes you should. If you do your research you’ll be able to drive out a car for thousands less than you’d pay elsewhere (after all, 90% of cars sold at auction are bought by traders for resale). However, it's crucial to keep in mind all the costs and not to get carried away, as you can soon end up spending more than you would buying a car conventionally.

Finally, as well as the direct costs of buying at an auction which have already been mentioned above, there are indirect costs which should also be factored into any potential auction purchase. Most auctions occur on weekdays, which for many people may mean using precious annual leave. Further considerations are the research time and transportation costs on the day, both of which you won’t get back if you leave empty handed.

In summary, the vehicle checks, comprehensive info and indemnities that organisations such as BCA and Manheim now provide make it easier, safer and more attractive than ever for a private individual to buy at auction.

If you're flexible on what you want and are prepared to put in the time, buying at auction is a viable alternative to buying privately and can save you thousands.

 


 

Further reading:

BCA - http://www.british-car-auctions.co.uk/buy/Useful-information/How-to-buy-at-auction/

Car Buyer - http://www.carbuyer.co.uk/tips-and-advice/148470/car-auctions-how-to-bid-and-buy

The Telegraph - http://www.telegraph.co.uk/motoring/columnists/James-Foxall/9651085/Is-it-wise-to-buy-a-car-at-auction.html

BCA Blackbushe Auction Hall

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