How can I buy a repossessed car? Who sells repo cars? Are repo cars a good buy? Let’s take a look at these vehicles, and how the process works.
About 44% of American adults have auto loans. In total, these amount to more than $1.1 trillion. Auto loan applications have been growing for the past couple of years. For example, by the end of 2017, auto loans had increased to $568.6 billion from $564.6 billion the previous year.
Unfortunately, many people are missing payments. According to the Federal Reserve, in the fourth quarter of 2018, auto loans with more than 90-days delinquent increased by 1.5 million. This raised the number of delinquent loans to more than 7 million, the highest in recent years. As the number of people failing to meet their auto loan payments rises, so do the car repossessions.
Buy the Repossessed Cars from Lenders
It is crucial to note that most lenders only repossess cars after several missed payments. Lenders make more money through the interest paid on auto loans. However, when a client misses several payments, the lenders start losing money. At this point all the lender wants is to sell the car to recoup the losses. This means that the chances of getting a vehicle at a price below the market price are high.
Lenders usually have a list of the repossessed cars. These are often sold at auctions. You can have access to these auctions online, via specialized platforms like Auto Auction Mall. As in any other auctions, the vehicle is sold to the person with the highest bid. If yours is the highest, you will be allowed to inspect the car before making payment. It is best to have a mechanic with you so that you can be sure you are getting a good deal.
- Everything You Need to Know about Buying Used Cars
- Can I Buy Cars at Auction?
- Financing a Used Car for Sale
- How do I buy a car from Copart?
The downside of buying repossessed cars from lenders is you buy the vehicle as-is. Lenders are not interested in incurring more costs in repairs. They sell the car as it is. It is also likely that those who fail to make auto payments may not have serviced the vehicles as required. Some people may even go as far as damaging the car when they know it will be repossessed.
Repo Reseller Service
Some lenders prefer selling repossessed cars to companies that specialize in the sale of these cars. This way, lenders do not take ownership of the car after reclaiming it. Used car dealers also buy repossessed vehicles. The vehicles simply move from the defaulter straight to the hands of companies that sell repossessed cars. The advantage of buying from such dealers is they tend to have cars that are in excellent condition. They will clean and repair cars before putting them up for sale.
You can find most of the companies selling repossessed cars online. Identify the brand and model you would like to buy and place a bid. It is best to avoid dealers who insist on upfront payment before viewing the car.
Police Repo and Lender Auctions
Police auctions are numerous. The police often impound, repossess and confiscate vehicles. Over time, these cars are sold in auctions, including government auctions. You can also find these vehicles online, in platforms like Auto Auction Mall. Unfortunately, some of these cars are in a poor state, especially since some are packed for months, or even years before they are put up for sale. Before bidding for a repo car, it is best to visit some auctions get an idea on the quality of cars. If you find one that you can be fixed at a low cost, you may consider bidding for it. Before placing a bid, it is essential to have the funds just in case your bid is the highest.