Have you thought about buying a repossessed car? Ever wondered what to look for in a repo vehicle? Knowing what to look for, where to find it and what to ask can land you a great deal and potentially save you thousands.
What is a repossessed car?
A car is repossessed when the lender takes back possession of the vehicle associated with the loan. Repossession typically takes place after the recipient of the loan falls behind or becomes delinquent on payments. Depending on the loan and the state where the car is registered, lenders can initiate the repossession process after the owner misses just one payment.
What are the benefits of buying a repossessed car?
Repossessed cars are often very affordable and sell for nearly 25-40 percent of a similar vehicle’s value due to the reason they are on the market. Because banks and lenders are primarily trying to recoup the money they lost on the car or the value of the loan, the markup on a “repo” car is not as high as one found at a dealership. Another reason repossessed vehicles come at such a discount is that unlike a dealership or private seller, the lending institution typically foregoes the expense of cleaning or repairing the vehicle. The car is sold “as is”.
Many repossessed cars are in still in good condition. This largely depends on the previous owner, but finding a repo car in great shape is more common than one would think. In the case of newer year model cars, you may even be able to retain the factory warranty!
What are the cons of buying a repo car?
The biggest downside of repossessed cars is typically the lack of historical information available on the vehicle. You may not know where the car was located prior to the auction. You may not know whether the previous owner kept up with basic maintenance such as oil changes and tire rotations. The good thing is that you can alleviate this concern by doing your homework and knowing what to look for!
What do I look for when inspecting a repossessed car?
Repo cars are generally sold as-is, so inspecting the vehicle before the auction is a tremendous advantage. If permitted, bring an approved inspector with you or send one as a proxy to get an in-depth look at the car. If you are inspecting the car alone and are allowed, start the car and listen for any strange noises like knocks or rattling. Thoroughly inspect electrical components such as power locks and windows, instrument clusters and lights. If you can, check the levels of oil, transmission fluid and coolant. Visit Copart’s Inspection Tips page for more guidelines and resources.
Where can I find repossessed vehicles?
Repossessed vehicles can be found through many channels. In some cases, you can go to a bank or credit union and ask to see their repo file. This file will have the pertinent details of the vehicles they want to sell. A used car dealership is also a good place to find repo cars. Some of the benefits of buying from a dealership are that they will take the time to clean the car and make small repairs. There are even some cases where a dealer will offer a warranty or competitive financing.
One of the more common channels to find repo cars is through physical and online auto auctions. Online vehicle auctions such as Copart are excellent because they can provide a more extensive inventory of repossessed cars that is accessible to anyone with a Membership and an internet connection.