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Considerations When Bidding On Bank Repossessed Cars

JamesRhodes | Dec 14, 2009 |

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Given the state of the wider economy in the country, there are times when bank repossessed cars can make good sense instead of heading to a used car lot. There are a great many cars that are ending up repossessed by the lien holders -- in this case, banks -- these days. When they are owners could no longer afford the payments, the banks stepped in and exercise their lien rights. Nowadays, there is no concrete figure available that can tell us how many cars across the country have been repossessed, but the evidence is plain that there are a large number being repossessed and then resold through auctions and other mechanisms all across the country and especially in certain hard-hit regions. Buying a repossessed vehicle can save quite a bit of money and certain circumstances. Before deciding to take the plunge and make your next vehicle purchase one from a bank that has repossessed it and is then auctioning it off, take some time to learn a few things about why he repossession occurs, how they end up being sold off and why they can make some financial sense. The more you know about such a process the better the chances of saving significant amount of money. In cases where a vehicle has been repossessed, it is almost always the case that the owner has fallen behind on schedule payments and the bank has exercised its lien and taken possession of the vehicle. Normally, the bank will hire a repossession agency which will send out its "repo men (and women)" to bring the vehicle in no matter where it might be located or even hidden. Banks themselves do not store or hold these repo vehicles for sale, in a general sense. Rather, they will work with a local company that specializes in vehicle auctions and it is the company that will store the vehicle in a guarded lot and keep control over it until it can be auctioned off. The auction company will make its money based on a commission or a percentage on the price of the vehicle when sold. Banks will in many cases place what is called a reserve on the vehicle. This means that there is a set price below which the bank will not allow the vehicle to be sold. Persons bidding on the car won't know what the reserve is but the auction company will know. Normally, the reserve is usually somewhere between the retail and wholesale price on the vehicle derived from its "blue book" value. If you're thinking of going to an auto auction and bidding on one of these bank repossessed vehicles, understand first of all that many cars at auction may not be in prime shape, though they may only need a little reconditioning in order to be in excellent to outstanding condition. Still, many such vehicles are actually in top condition and ready to be put back into service. At auction, make sure to check the vehicle over as carefully as he is allowed before bidding on it. Bring your own copy of the "blue book" or similar type of book that will show retail and wholesale prices of each vehicle and watch out for vehicles that show evidence of excess wear and tear. Have the auction an company employee start up the motor if allowed. If done right, it's possible to save a lot of money.