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A Guide to Finding Repo Cars for Sale

By Mike Richards Updated: 10/22/2019 Posted: 10/20/2019

A repo car dealer auction is where used car dealers go to buy a repossessed vehicle. This is one of the fastest ways that banks, leasing companies or other lenders can sell off repossessed cars and recover their money. Most of these facilities do not have enough space to store repo vehicles. By September 2019, about 2.4 million vehicles were repossessed in the United States. This was an increase of 600,000 units from 2017. In June 2019, 6.7 million car buyers had defaulted on their payments by more than 90 days. We will talk about how you can buy repo cars for sale in online auctions.

A repo car auction online allows dealerships to buy repossessed cars at a reasonable price. The financial institutions recover their money quickly, and dealers get more cars to sell at a profit. Repossessed cars cost 25-40% less than similar used cars in the market. The opportunity to increase profits attract used car dealers to repo car auctions. So do you – as an individual, know how to find repo cars for sale online?

What is a Repo Car Auction?

Repossessed cars are cars that have been taken by lenders after the owners failed to make payments for the car loans they received. The American auto industry is doing phenomenally well. However, there are questions about its benefit to the national economy. This is because about half of the American population has auto loans totaling at least 1 trillion dollars in 2019.

When car owners who got financing for the cars they drive fail to meet their payment obligations, they risk having their cars repossessed. The process of auto possession depends entirely on state laws and the financier’s policies. Some lenders repossess vehicles within a few days of delay in payment, while others take a longer time in a bid to give their clients the chance to make payments.

The relationship between the car buyer and the lender is critical when it comes to car repossession. People who have been prompt when making payments tend to get leniency when they delay in meeting their payment obligations for the first time. It is always best to let the lender know if there will be delays before the due date. It is important to note that a repossession affects your credit score. Additionally, the repossession remains in the credit report for seven years.

Woman Buying Car Online

Online Auctions

A significant portion of repo cars find their way to auctions. This is because the number of buyers at auctions is significantly higher than at other sales points. Copart is one of the online auctions that have an extensive inventory of repo vehicles. They also conduct a physical repossessed cars sale regularly in different locations, along with salvage car sales. How do repo car auctions work? We will discuss this more below.

For potential buyers to have access to these cars, they need to sign up for a membership at the Copart website. Registration is free. However, you may not have access to all the vehicles since some of the inventory is reserved for dealers only. If you’d like to see all the cars, it is best to buy through an authorized Copart representative like Auto Auction Mall. IAAI is another online auction site that has a significant number of salvage and repo cars for sale online.

Police Repo Auctions

Sometimes the police are charged with the responsibility of repossessing vehicles, especially when ordered by the courts. Often, the vehicle owners choose to let these cars go because of bureaucracy and the inability to meet the set conditions for the return of the vehicles. For these vehicle owners, it is sometimes easier to get another car when they can. The police can only keep the cars in storage for so long. Instead of keeping these cars indefinitely, the police hold repo auctions.

Lender Repo Sales

Lenders also have a list of the repo vehicles that are available to people interested in buying them. Although many lenders choose to use repo sellers to manage the sales, sometimes lenders arrange auctions to sell these cars to the wider public.

What Are Repossessed Cars? Why are Cars Repossessed?

Repo Car On Towtruck

The basic definition of repossession is reclaiming ownership of something, in this case, a car, that is still of value but is yet to be fully paid off. The lender is usually listed as the lienholder on the auto title. This gives the financier the right to repossess the car at any given time, should the car buyer fail to make the payments as agreed upon by both parties.

If the car buyer is facing financial difficulties, it is usually in his or her best interest to contact the lender for leniency. Most lenders are not keen on repossessing forclosed cars because they don’t want to go through the hustle of finding a buyer for the vehicle to recover their money. If the reason behind the delay in payment is genuine, most would accept to defer the amount or change the terms to accommodate the changes in their client’s financial situation.

If the client is unresponsive or can no longer afford to meet the payments for the vehicle, the lender has no choice but to repossess the car.

The Statistics

About 1 of every 172 outstanding auto loans in the U.S. resulted in repossession in the first quarter of this year.

At least 7 million Americans were in serious delinquency on their car loans. This figure represents those who are 90 or more days behind, by research from the Federal Reserve Bank of New York. This scale has grown by more than a million compared to 2010 when the US was still suffering the greatest effects of the recession.

If you’re even one day late on your car payment, your auto lender may have the right to repossess your vehicle and recoup its investment.

There are two major types of repossession – voluntary and involuntary repossession.

Some creditors may go in for voluntary repossession in order to help clear their debts or to downgrade to a more affordable vehicle. Involuntary repossessions are initiated by the banks or creditors, with a court order.

Where to Find Cheap Reposessed Cars for Sale?

Repossessed cars are popular because you can get them at a price lower than the market value. This is because lenders are primarily interested in recovering their money. There are various places you can easily access repo vehicles for sale.

Promotion sign “Take me home today” at the dealership lot.

Buy from the Lender

If you are looking for a repo for sale, you might get it from your bank or credit union. You can ask your bank if they have a list of the repo cars for sale so that you can decide if there is any you are interested in purchasing. Often, lenders are only interested in recouping their losses and move on with their primary business, banking.

If there is a car you would like to buy on the list, ensure you know the market value before placing the bid. The bank may accept your bid, reject it, or wait for a better proposal. Unfortunately, this process can take weeks. It is best to inspect the car before paying for it. This is the only way if you are getting value for money.

The downside to buying repo cars for sale from the bank is no effort is made to improve the condition of the vehicle. The term for the purchase is buy-as-it-is.

Buying from a Repo Reseller

Today, lenders don’t have to manage the selling of repo vehicles. This is because most companies prefer to focus on their core responsibilities, rather than try to find buyers for repo car sales. Repo resellers help lenders by moving the vehicle from lender to buyer without taking ownership of the car.

The benefit of buying from such companies is they maintain a specific standard when it comes to the condition of the car. You are, therefore, guaranteed of getting a car that is running appropriately. The other advantage is repo resellers are not focused on profit margins. They’d rather see the movement of large volumes of vehicles quickly rather than being stuck with vehicles because the price is too high. This is mainly because these companies don’t take ownership of the cars. Their primary responsibility is selling them on behalf of lenders.

Used Car Dealers

dar dealership

You can also get repo cars from used car dealers. You are guaranteed to get a car in great condition because most dealers are interested in getting the highest profit possible. However, you’ll be paying a premium for it. A buyer tends to negotiate a lower price if the car’s condition is not in top shape. The downside is dealers are in business. They will sell the car at a profit. Some of the expenses that drive the price up include transportation costs, repairs, titling, detailing and other fees.

Of course, the simplest, and cheapest way to get your hands on a repo car is online. An online repo car auction gives you access to thousands of repo cars, delivered straight to your door.

Finding “Repo Car Auctions Near Me”

Although car repossession is not a great experience for those who default in paying their car loans, it is great for buyers looking for cars at a low price. It is easy to find car repo auctions near you by searching online. You can also contact your bank to find out when they have an auction for repo cars. If your local bank doesn’t manage the auctions, find out who does.

You may also find repo cars in dealer auctions. These are a particularly good place to find repo cars because they give you access to many auctions throughout the country. You can approach a dealer like Auto Auction Mall to act as your proxy when bidding for these cars, especially at dealer-only auctions. This will allow you to choose from a wider pool of vehicles at very low prices.

Buying Repo Cars for Sale through Online Dealer Auctions

NOVYY URENGOY, RUSSIA – JULY 27, 2013: Abandoned motor car Mercedes-Benz W140 S-class at the city street.

The biggest markets for repossessed vehicles are undoubtedly online auctions. Lenders know this, and this is why most choose to use online auctions to manage the sale of repo vehicles.

Copart and IAAI are some of the online auction sites that make it possible for you to bid for repo vehicles at your convenience. They have an extensive list of repo vehicles you can bid on. However, wouldn’t you like to see all the repo vehicles?

Most online auction sites give used car dealers priority when it comes to the purchase of repo vehicles. Auctions that are open to the public allow anyone to bid on these vehicles, but they still withhold some of the vehicles for dealers only.

For you to access the entire repo inventory, you need a dealer license. Dealers don’t just get access to all the cars, but they also get favorable prices. If you only buy a car occasionally, it may not make financial sense to get a license to be able to see the entire inventory to bid for the vehicles. But there is another way

Copart and IAAI have authorized representatives, like Auto Auction Mall, who can bid on your behalf. Using a proxy makes it possible for you to get dealer rates and view the same vehicles that dealers do.

The Experience of Buying Repo Cars for Sale

Repossessed cars are quite popular because they are cheap. However, buyers have different experiences when it comes to the purchase of repo vehicles. Some have an excellent experience with the first repo car they bought, others couldn’t find a reliable car after several searches, while others must travel great distances to get the perfect repo car. Despite the differences, there are plenty of similarities in most repo car buyers’ experiences.

The Type of Car You Need

Repo cars, just like any kind of vehicle in the used car market, come in different brands and makes. Any buyer interested in repo vehicles needs to know what kind of car they need. For example, are you looking for a family vehicle? How many passengers do you expect to have on board at any given time? Which car is more suitable for your family? If it is a truck you need, consider the load you expect to carry and look at the various brands to determine which one offers the best strength to manage the weight.

Don’t Expect a Perfect Car

Even if a car is repossessed when in good condition, the way it is kept actively affects the state in which it will be sold. You are likely to find rust in certain areas, a dead battery, or worn-out tires. When bidding for a vehicle, remember even a car with a clean title is likely to have issues. If you are lucky, the repairs may be minor. It is also best to carry tools, like a jump start box, in case the battery is dead.

When Bidding, Consider Other Possible Costs

Auctions have thousands of cars available on any given day for sell. Copart has at thousands of cars in every location they have a sale. Given this number, it should not come as a surprise if you discover the keys of the car you bid on missing. Before placing a bid, you need to consider how much you can afford to spend on the car, with a little leftover for unforeseen costs, like making a set of keys for the vehicle.

new car keys

Knowing what you should expect will help you to save on time since you can quickly tell if the repo car is worth a bid or not. If the price becomes too competitive, quickly terminate your bid and move on to another car. This will make your experience enjoyable, and you are likely to get a vehicle that fits your budget and in the best condition possible.

Each buyer’s experience at a repo auction is different. But the way to get the best experience is to buy your vehicle through an online auction. Many of the inconveniences of buying at a physical auction simply to not apply at an online auction, and you will get all the details you need to make an informed decision. Bear this in mind when you look for repo vehicles for sale.

What You Need to Know about Repossessed Cars for Sale Online

Repo Cars Cost Lower than the Average Market Value

Lenders take most of the repossessed vehicles in the market after past owners fail to meet the payments as per the lending agreement. By the time the lender chooses to repossess a vehicle, the lender would have made some payments before defaulting. This is why lenders don’t look for the entire market value of the car. They only want to recover their money. This is the primary reason repossessed vehicles tend to be cheaper than the average market value.

Most Repo Vehicles are in Great Condition

Most repo cars for sale are in great shape because they were taken from those who took auto loans while they were still being used. This means they were still running, and possibly well maintained because the owners were still using them.

However, you should note that not all repo cars received adequate care. Although repo cars are quite cheap, and many are in great shape, you should still remain cautious when choosing the car to buy. This is because it is possible that, if the owners defaulted because they couldn’t afford loan payments, they might not have maintained the vehicle as required.

If the person failed to meet the payment terms, what are the chances the person maintained the car? Just like with any other used car, it is best to remain cautious when selecting a repo car to buy.

The Vehicle’s History is Not Readily Available

Nobody likes having their car repossessed. Many people fight to retain the car when lenders attempt to reclaim it. Often, the courts have to get involved in repossession disputes. Such owners may, therefore, be unwilling to give the necessary information on the vehicle’s history.

When buying a used car, it is advised that you find out as much as you can about the car. When it comes to buying repo cars, you are unlikely to get this information. Fortunately, most lenders don’t allow defaulters to keep the car after 90 days of non-payment.

Exporting Auctioned Repo Cars

The process of buying and exporting a repo vehicle is not that different from buying other used cars at an auction. You only need to buy from a dealer who can manage your bids, as well as organize shipping.

Remember that you need to consider the age of the vehicle when buying a repo vehicle. A repossessed vehicle that was manufactured ten years ago is likely to have more problems than one that was released to the market a year ago.

Before buying the car through a dealer, find out if the can be shipped to your location. Alternatively, you can organize shipping if you have a company you can trust to manage the process. The advantage of leaving the entire process to the dealer is that the company has a reputation to maintain, and dealers have deals in place with the shippers. You may even get preferential rates if the shippers give the dealership discounted rates.

The Process of Exporting

The process of buying and exporting a repo vehicle is not very different from that of buying other used cars at an auction. You only need to buy from a dealer who can manage your bids, as well as organize shipping.

Importing a car from the US is undoubtedly cheaper than buying it locally, especially in countries in West Africa. You need to get the certificate of title after buying the repo vehicle. The US customs office will need to verify that you purchased the car and that it is not stolen before it is allowed to leave the United States. Your country’s customs office will also require documents to prove you bought the car.

If you are concerned about the shipping cost, it is best to buy the car from an auction that is closest to the port. This will help you save on the expense of transporting the vehicle from the auction site to the port.

Shipping Methods

There are several decisions you’ll need to make when it comes to exporting the car. Will you use air freight or ocean freight? Air freight is quite costly and faster. Most people who export vehicles from the US prefer ocean freight. It is more affordable, and most people can afford to wait a few weeks to get their vehicle. It is essential to ask when you should expect the car from the day the ship leaves.

When using ocean freight, you have a choice of transporting the vehicle in a container or Toll-On Roll-Off, commonly known as RORO. RORO shipping is cheaper than container shipping. However, the risk is higher with RORO. You should find out the insurance cover you can take while your car is at sea.

Ship a Car Overseas

Interested to learn more about buying repossessed cars for sale? Take a look at some of our live auctions below, or visit our homepage to create an advanced search, and see what’s available close to you. We also have a range of help guides to get you started.

Example Live Auctions of Repo Cars for Sale