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Best tips for buying a car at auction

Auctions can save you between 10 and 30 per cent. But bid with your head, not over it.
Stephen Corby
Contributing Journalist
CarsGuide

28 May 2015 • 7 min read

Auctions can, it seems, do strange things to the human brain.

The newspapers are full of stories about people who set off on a Saturday to buy a house and somehow spent $300,000 more than they meant to.

There's far less danger of over-reaching when buying a car at auction, although that very human desire to win at all costs can still kick in, but it is a similar experience in so far as you don't get to live in a house before you buy it, nor do you get to drive the cars that are offered up at auctions before you hand your money over.

As such, there's an element of danger, which can make the whole process seem like a cross between the Boxing Day sales and Russian roulette, but research and careful preparation can reduce those risks.

And, as with any kind of auction, what makes them a tempting proposition is that you stand a good chance of picking up a bargain. Buying a car at auction can be 10 to 30 per cent cheaper than shopping for a second-hand car at your local dealer.

How, then, do you come home with a winner, rather than a lemon?

1. Preparation is the key

Knowledge is power when it comes to car auctions, so you need to make sure you are fully informed about what the kind of car you want to buy is worth.

Find out what similar models are going for on the private and dealer markets, remembering that the prices people end up paying are almost always lower than list price.

People can get caught up if they haven't done all of their research prior to bidding

Be sure to check the car's true worth with CarsGuide.com.au's car-valuation service which uses industry sales data to give an accurate price range, depending on mileage and features.

It's important to prepare as fully as possible before immersing yourself in an auction's rapid-fire environment, according to Brendon Green, General Manager of Motor Vehicles at Pickles Auctions, Australia's leading vehicle auctioneers.

"An auction is an exciting environment and people can get caught up if they haven't done all of their research prior to bidding," he says.

"We suggest customers attend a few auctions as an observer before they're ready to bid, to get acquainted with the process.

"We want people to set their budgets prior to auction, check condition reports and read through the service history."

You can, of course, avoid auction-room hysteria altogether by researching and bidding online, but it's still vital to inspect the cars in person beforehand.

2. Look beneath the sticker

So how do you avoid buying a money pit when you can't take a test drive?

It's a simple rule: time spent preparing beats time spent repairing. Make sure the car you're bidding on is well-maintained, and check the service history carefully.

If the condition report is missing or incomplete, walk away

The complex electrical systems and tech-heavy engines in modern cars require more careful attention. They're not inherently weaker than older technology but they are more intricate; if the parts aren't properly maintained, the damage is more difficult – and expensive – to repair.

If the service history is patchy or incomplete, be aware of the hidden costs you may be taking on with what might seem like a bargain.

Auctioneers will offer information about the car's condition and services in a detailed report, usually online and at the auction site. This document is your only evidence that a car has been properly maintained. If the condition report is missing or incomplete, walk away.

Choose cars offered with a roadworthy certificate. It makes insurance and registration easy, as well as saving on unexpected costs such as brake pads and tyres.

Because you can't drive any of the cars before bidding it's a good idea to test drive similar vehicles ahead of time to decide if your choice is right for you. Check things like sight lines, the comfort of the seats, whether it feels powerful enough for your needs, if it has ISOFIX attachments, and the general ergonomics.

You can inspect cars before they're auctioned, however. If you're concerned that you'll overlook something, you can hire professional vehicle inspectors or bring your mechanic along.

"It's the best way to gauge the true condition of the car and narrow down your list of options," says Green.

"An inspection is also a great time to familiarise yourself with the auction house and ask its employees questions to help make your decision."

Newer cars will still have a few months or years of new-car warranty left and, for extra assurance, some auction houses offer extended warranties.

3. What not to buy

Many cars have gearbox, engine or trim options that make them as desirable as a smashed windscreen.

As an example, early automated manual gearboxes like BMW's jerky SMG or Alfa Romeo's Selespeed (nicknamed "sillyspeed"), which were exciting when launched but now seem about as cutting edge as soap.

Remember, bid with your head, not over it

Outmoded engines can carry a price penalty at the petrol pump, and be aware of aesthetic choices, because a car with puce green paint and red leather will not hold much resale value.

Look through used listings on CarsGuide.com.au to find the more desirable options that carry higher second-hand prices and decide what you're happy paying for and what you can live without. Remember that some models, and indeed whole brands, can be difficult to re-sell down the line.

4. The bottom line

Buying at auction can be from 10 to 30 per cent cheaper than the dealership, according to Pickles Auctions, or, if you're really lucky, even higher.

The price you get will be highly dependent on how many other people there are on the day seeking the same car, or model, as you. Remember, bid with your head, not over it.

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