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Buyer Tips

What Makes Used Car Auctions Cheaper Than Dealerships?

By Daisy Emah-Emah Updated: 07/26/2022 Posted: 05/06/2022

You may be wondering why car auctions?


The answer? – Price!


Car auctions are generally cheaper than dealerships or private sales. In fact, many dealerships source their inventory from car auctions, do some minor maintenance and mark up to maximize their profit. 


Wholesale vehicle auctions are a way for you to own your dream car without breaking the bank.  It is also a convenient way for insurance houses to recoup money lost on claims. Or for charities to raise funds for their cause through donated vehicles. 



new car auction


If you are a dismantler or a mechanic or maybe your business is to salvage and sell parts, then wholesale auctions give you a huge inventory to source from!


There are many wholesale auction platforms where you can purchase a vehicle with varying levels of access depending on the documentation required. 

Copart is one of the largest wholesale vehicle auction houses in the world with a vast majority of salvage, repossessed, vandalized, rebuilt, and clean title vehicles. To participate in dealer auctions, Copart requires you to own a dealers-license.


Auto Auction Mall bridges the gap and helps you bid without requiring a dealership license. Auto Auction Mall helps you save on your purchase and you can have access to Copart inventory and other auction houses in the US. Also, helps with shipping arrangements for buyers outside of the US.


So what makes vehicles bought at car auctions so cheap?


Car auction price history shows that you will most likely save up to 30-40% on your purchase by buying from wholesale auctions instead of local dealership dealers or private sales. Many used car dealerships sources their inventory in car auctions, fix it up, and put them in a showcase. 


For clarity, here are some reasons why car auctions are cheap…


Why are Used Car Auctions Cheap?

1. Minor to Major Damages That Are Fixable 

These are salvage or accident vehicles with major or minor damages. Damages may include vehicle frame and chassis damage (front-end, rear-end, side damage), mechanical damage, or undercarriage damage.


Vehicle frame damage may be major or minor dents and scratches that are easy to fix. If the damage is major – many buyers avoid placing bids making the vehicle cheaper. 


salvage hyundai


Mechanical damage affects the mechanical components of the vehicle. Such as the engine brake parts, transmission, etc, and many buyers avoid bidding on these vehicles. This makes the vehicles cheaper during the live auction. 



2. Natural Disaster Affected Vehicles 

These are damages caused by natural disasters like floods, hail, fire, etc. vehicles affected by flood/water are generally avoided because they may be rejected by shipping lines this is to prevent fire caused by the electrical components in the car.  


But they can be exported by containers.


The common damage you find visually is lingering moisture, rust, scents, or spots of mud ruts.  Water also damages the interior of the vehicle – making it less appealing to the buyer and cheaper during the auction. 


Flooded car interior details, total loss


In most cases, taking time to do a thorough drying of all parts and a thorough cleaning and full maintenance of the fuel line as well as changing of all fluids is all it takes to restore your vehicle to operational efficiency. But there is always the risk of irreparable damage.



3. Insurance Companies Looking to Collect Back on Premiums Paid Out

Many insurance companies sell damaged vehicles through auto auctions as an avenue to recover premiums payout to their clients. These vehicles may be heavily damaged or slightly damaged and the initial owners have received payouts for the value of the vehicle. 


The initial vehicles are then repossessed by the insurance companies and sold at the r vehicle auction lots like IAAI


Salvage Title Insurance Cars Auctions


Vehicles that are impounded or repossessed by insurance companies due to unsettled payments or outstanding liens may also be sold at car auctions with a view to funding recovery.


These vehicles are usually cheap to buy if you’re on a budget and often make for good project cars.



4. Charities Looking to Get Money From Vehicle Donations 

Vehicles that are given to charities as donations also end up in car auctions. 


Many charity organizations sell cars donated to them to raise money for their cause. If you’re looking to buy a car on a budget and also contribute to a cause – charity auctions are also a great place.


The vehicles are affordable and you may land an awesome deal on high-valued vehicles. 



Further Reading

  1. 5 Sites you Need to Check Before Buying a Used Car 
  2. What Should I Check For When Buying a Car
  3. Everything You Need to Know about Buying Used Cars
  4. How to Get the Best Vehicle History Report on Auction Cars for Sale 



Final Words!

For instance, a 2020 Toyota Camry has a starting price of $25,295 up to $35,720 depending on the trim and advanced features available. But the same vehicle can be gotten for a car auction at a starting price of $10,000. This depends on the mileage, location, and condition of the vehicle. 


If you’re patient enough you may strike a diamond in the mud in car auctions – and go home with a deal of a lifetime.


To save and not end up with a lemon in a car auction, you need to research, plan, and budget before placing your bids. 


Recommended checking the vehicle’s history report before placing your bid. This report contains information on the vehicle – such as odometer reading, registration history, damage, and repair history, etc. 



Before purchasing for a car auction like Auto Auction Mall you need to determine your budget, research the vehicle you want to purchase, and get expert assistance. 


To get started with us sign up for free and have access to our dealer-only auctions – no license required!


Our representatives are available to guide and assist throughout the entire process. 



Sign up to get started!