- Buying a car at auction can lead to significant savings compared to dealer or private sales.
- The lower price comes with added risk, as auction cars are sold without test drives and often require thorough inspections to assess reliability.
Auction house Pickles estimates you can save between 10% and 30% through buying a car at auction, as opposed to if you bought privately or through a dealer. This would bring down, say, a $30,000 car in usual circumstances, to $21,000-$27,000.
The potential cost-benefit is tempting, but with auction cars, you might need to do a bit of extra legwork to make sure what you’re buying is reliable, such as inspecting the vehicle thoroughly, as auction houses usually do not allow test drives.
While stories of bidding wars for houses are common, they’re less common at car auctions. That’s because no one really knows what’s ticking under the bonnet. Auction sites do all the checks and balances, but it’s still a pressure situation where you don’t really have time to think about your potential purchase.
That said, if you haven’t had much luck on car sales websites or at dealerships, it might be worth checking out auction sites - they can be a useful way to get into a set of wheels under market value.
Buying cars at auction: What to know
A car auction warehouse can be an exciting place, like a late-night Chinese market or the share trading floor in New York City, but there are a few things to consider before you bid.
1. Inspections
Cars are usually listed online with photos and a condition report, and you can also visit the branch ahead of time to inspect. Cars come with lot numbers, so it’s important to remember this number or bring it with you, as it will be on the windscreen.
An auction house floor can be a sea of ex-Government cars that all look the same, so it can be tough to tell which one is your model. Many auction houses allow you to bring your mechanic for an inspection, but you can’t take a test drive before purchasing.
2. Register for the auction
Many auction houses require you to complete a registration form and provide a photo ID to access the auction floor. You can usually register online as well. Once registered, you’ll receive a bidder number to bring with you on the day of the auction.
3. The bidding process
Once you know the day and time your target car is going up for auction, bidding is a fairly straightforward process:
Stick your hand up at a price you like and position yourself where the auction staff can see you. If you are the highest bidder, the staff will approach you so you can pay your deposit.
If the car fails to reach its reserve price, you can likely negotiate with the seller directly.
If you’re unfamiliar with the bidding process, auction houses are usually happy for you to witness other auctions taking place so you can get a gist of what to do. From there, you’ll need to sort out registration, insurance and finance.
4. Registration
By law, cars sold at auction must have a clear title, meaning there should be no finance owing on it. You can usually do a little bit of homework to see if a car you like has previously been stolen or written off by doing a check on the Personal Properties Securities Register (PPSR) for about $2.
If your bid is successful, it’s usually just a case of signing over the registration papers at the auction house, and then these are submitted to your traffic authority.
5. Insurance
Insurance can be a tricky one, as you want to be covered as soon as you drive off the lot. You don’t want to run into a pole within five minutes of hopping in your new car, but crazier things have happened.
Usually, this involves a quick call to an insurer to explain your situation - that you’ve purchased a car at auction - so you can get coverage and a quote, either for the day or for longer.
This ensures you’re covered as soon as you drive off the lot. Auction houses may partner with insurers so you can get a policy straight away, but it could still be a good idea to shop around and find a fair price.
6. Finance
If you don’t have the cash to pay for your vehicle upfront, your option is to get a loan of some sort. There are various ways you can do this: finance organised through the auction house, an unsecured (personal) car loan, or a secured car loan.
Auction house car loans are usually underwritten by a large financing company or partner.
Unsecured car loans likely attract a higher interest rate as they aren’t using the car as collateral in case you default on the loan.
Secured car loans use the car as collateral, so if you default on the loan, the financier takes your car, but the trade-off is you could be able to get a much more competitive interest rate.
With car loans, you can sometimes get a pre-approval limit so you can walk into the auction house with a budget in mind.
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| Lender | Car Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Interest Type | Vehicle Type | Maximum Vehicle Age | Ongoing Fee | Upfront Fee | Total Repayment | Early Repayment | Instant Approval | Online Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
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5.94% p.a. | 7.07% p.a. | $579 | Variable | New | $8 | $400 | $34,749 |
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5.67% p.a. | 6.10% p.a. | $575 | Fixed | New | $0 | $350 | $34,524 |
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5.95% p.a. | 5.95% p.a. | $579 | Fixed | New | $0 | $0 | $34,757 |
| Promoted | Disclosure |
Pros and cons of car auctions
Buying a car at auction can be exciting, and a good way to find a bargain. However, there are a few things you should know.
Pros
- Lower prices: Cars at auction often sell for less than dealership or private-party prices because sellers are focused on moving inventory quickly. Buyers who are flexible on brand, model, or features can find especially good deals, as competition may be lower for less in-demand vehicles.
- Wide selection: Auctions offer many vehicles in one place, including repossessions, fleet cars, and trade-ins.
- Fast purchase process: The buying process at an auction is typically much quicker than traditional car shopping. There are no drawn-out negotiations. Once bidding ends, the sale is final, allowing buyers to complete their purchase efficiently and move on without delays.
Cons
- No test drives: You can give the car a good inspection, and a mechanic can come along - you may be able to start the engine, but you generally can't do test drives.
- Condition reports may not tell the whole story: By law, cars not deemed as salvage or written off must come with a roadworthy and other legal certificates, but these may not be a good indicator of reliability - this is where an inspection by a mechanic can be useful.
- Government cars can be a mixed bag: If it’s an ex-duty police car, it’s likely been driven hard and idled for a long time. Though if it’s been a fleet car or an officer’s car, it may have had a relatively easy life.
- No returns: With dealer sales, there’s usually a cooling-off period if you have a change of heart. However, once the bidding is done, you usually can’t return the item, unless it’s been damaged in transit.
Are salvage or damaged car auctions worth it?
Buying a wrecked vehicle might seem like a good idea, but you might want to think twice. That low price is often for a good reason!
A repairable write-off simply means a car costs more to repair than the insurer deems it's worth. From there, the insurer will usually pay out the previous owner the market or agreed value, and on-sells the wreck to an auction house.
In many states, it's legal to sell and buy a repairable write-off, provided it meets conditions to get back on the road in your state. A total write-off, however, is usually not road-legal under any circumstances. Repairable write-offs might look okay, but they'll almost never be as good as they once were, and structural integrity could have taken a huge hit, making the car less safe.
Popular car auction sites
There are two major auction houses that are popular for in-person used vehicle auctions. They are:
Pickles: Pickles has 25 sites Australia-wide. Sites encompass capital cities, as well as major regional centres such as Wagga Wagga and Townsville. Deposits are required for general or Government car sales of $500, prestige cars $1,000. EFTPOS deposits are available up to $500 only, otherwise cash or bank cheques are required.
Manheim: Manheim has sites in all capital cities, as well as Newcastle and Townsville. On its website, you can look for cars available, as well as upcoming auctions. Many auctions are also simulcast online, so if you can’t make it in-person, you can still see all the action. Deposits are required - the greater of $500 or 10% applies, and payments can be made by cash, EFTPOS, bank cheque or credit card.
There are likely numerous other state or region-specific auction houses dotted around Australia, but Pickles and Manheim are some of the largest with a national presence.
Popular online car auction sites
The good news is that many of the familiar car auction sites also host online auctions. Users are usually able to log into a live stream of the auction and even place bids. Popular online car auction sites include:
- Grays Online
- Lloyds Auctions
- Pickles
- Bids Online
Is buying a car online a good idea?
The good news is that buying a car online is often as easy as going to an auction in-person, and potentially even easier. Condition reports are usually available online, so you can get a better idea of what you're actually purchasing. However, for peace of mind, it might be more ideal to inspect the car in-person, but that's what a trusted mechanic is for.
Do the police have auctions in Australia?
The short answer is yes, they do. However, most of the time, stolen goods that haven’t been claimed are passed onto third-party online auction sites such as Grays Online auctions.
You may not even know the object you are buying has come from the police, though if it’s an ex-police car it may be advertised as such. Ex-police cars can include ex-duty cars used to chase bad guys in, or a stately town car used to ferry around the commissioner to important meetings.
The lights, sirens and important equipment are removed, of course, but you may still see evidence that it was once a cop car, such as holes drilled where computers and cameras used to sit.
