Looking for a bargain on your next used vehicle? At car auctions, you bid against other buyers instead of negotiating with dealers. You usually can’t get a refund on cars bought at auction, and you often won’t get a vehicle warranty either. Make sure you thoroughly check the condition of any car before bidding to avoid ending up with a raw deal.
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Auction houses access used cars from a variety of sources, such as ex-police or government cars, cars repossessed by finance companies and former rental cars that are due for replacement. You can find auctions that only deal with specific types of vehicles like classic cars, as well as more general auctions.
Here are the steps you can expect to go through when buying a car at auction:
1. Research car auctions near you
Search online for auctions in your area. After you find one you’re interested in, check to see if there’s a catalog available of the vehicles that will be auctioned. This typically provides information on each car’s model, ownership history and potential costs for maintenance and repairs.
You also might want to consider visiting a few auctions in advance to get a better understanding of how they work.
2. Register in advance
You’ll likely need to register for the auction and provide identification in advance. You may also be required to prove you have enough money to pay for a car at auction, so have a bank statement, credit card statement or loan pre-approval offer on hand just in case. When you get to the auction, the auctioneer will give you an identifying marker like a numbered car or paddle which you can then use to make bids.
3. Compare the different cars available
Don’t rush to bid on the first car you see. Look at each vehicle to compare builds and see which one you’re interested in most. If the seller is at the auction, ask them why they’re choosing to sell the vehicle and if there was any repair work that was done. If you have any questions or concerns about a vehicle, raise them before the auction rather than after it commences.
4. Inspect the vehicle
If possible, look thoroughly at the interior and exterior of the car to check for defects, such as signs of previous accidents, rust or broken parts. Check for registration papers as well as the vehicle identification number (VIN).
The VIN can typically be found on the dashboard, driver’s side door and in front of the engine — make sure the numbers match, otherwise the car might be stolen. You can then use the car’s VIN to look up the vehicle history report, which verifies ownership history, accidents and repairs.
5. Start bidding
This is when you’re facing off against other people interested in purchasing the same car as you. Vehicles typically come with a reserve price, which is the lowest bid that will be accepted. If no bid reaches the reserve price, the seller can choose not to sell the car. But if a bid is above the reserve price, the seller must accept it.
If you have the highest bid at or above the reserve price, you’re required to complete the sale. For whichever car you’re interested in buying, keep the market value in mind to determine if you’re actually getting a good deal.
6. Negotiate with the owner if the car doesn’t sell.
You can try doing this if a car failed to reach the reserve price. You can possibly get the seller’s details from the auctioneer to negotiate with them directly.
7. Pay for the car and transfer the title
If you’ve bid successfully, you’ll generally be asked to make a down payment of around 10% at the end of the auction. This is why it’s a good idea to have a pre-approval offer from a few different lenders to prove you have the funds available to pay for the vehicle.
How do I inspect the vehicle?
Always give the car a thorough inspection before buying. Try following this checklist to make it easier.:
1. Check the exterior
Look for any signs of a previous accident.
Check for any rust or corrosion — it may indicate more extensive damage.
Examine for hail damage, dents and panel irregularities.
Ensure the door and boot seals are intact.
Look for chips or variations in the paint.
Check the engine exterior for any damage or abnormalities.
Check the engine oil and radiator coolant.
2. Go over the interior
Check the condition of upholstery and interior paneling.
Look for any signs of wear and tear on the seat belts.
Find out whether the electronics — like air conditioning, power windows and the audio system — are functional.
3. Start the car, if possible
Check for functioning of interior lights and all exterior lights.
See that dials and electronics such as air conditioning and audio are working as expected.
Listen for unusual engine noises.
4. Check the documentation
Transfer of ownership documents (eg. certificate of title, vehicle bill of sale).
Vehicle history report.
How can I pay for a car I bought at an auction?
You have a few options when it comes to financing a car you bought at auction:
Used car loan. You can take out a loan through a bank, credit union or online provider. Check out our guide to used car loans to learn more about the differences between secured and unsecured loans, interest rates and terms.
Unsecured personal loan. This type of loan generally doesn’t require you to put up any collateral, although they typically come with higher rates.
Although buying a car at auction can be cheaper than getting one at a dealership, the costs can be unpredictable. You may not only need to pay for the car itself, but also taxes, buyer’s premium, registration fees and any repairs that need to be made. Adding up these extra expenses can help you figure out how much you’ll need to borrow.
If you opt for a car loan or personal loan, you may want to consider getting preapproved from a few providers so you know how much you have to spend. This can also give you an idea of what rates and terms you qualify for so that you can find the best deal available to you.
Can I get financing directly from the auction house?
Generally, no. Most auctions require you to have some form of payment ready with you before bidding. Though some online car auctions provide financing, you should still have a backup form of payment ready, just in case.
Compare used car loans
What you should know about buying a car at auction
Ready to start bidding? Here are a few pointers to help ensure your car auction experience goes smoothly:
Check the car’s certifications before buying. Some vehicles might be sold with a certificate of title or pink slip, while others may not. You should add the cost of registration to the cost of the vehicle for an idea of total expenses.
Expect to pay a buyer’s fee. If you’ve bid successfully you will generally need to make a payment of $500 at the end of the auction.
Consider market value before you bid. This will give you a good idea of the vehicle’s price before you start the auction. Check resources like the Canadian Black Book or autoTrader.ca to zero in on a fair price.
Know the competition. It can help to know whether you’re bidding against dealers or the general public. Dealers tend to look for discounted cars and usually avoid bidding too high, making it easier to get a bargain.
Ask questions. If you have any questions or concerns about a vehicle, raise them before the auction rather than after it commences.
Bring a friend. If you don’t know enough about cars to inspect it properly, it’ll be worth bringing along someone who does. That way, you can have someone you trust guide you through what questions to ask and what to watch out for.
Try before you bid. If you’re unfamiliar with car auctions it can help to attend a few first without buying anything. They can be fast paced, so a good understanding of the processes can help you bid smarter.
It’s easy to get caught up in the quick-moving energy of a car auction. But beware of the following points:
Appearances can be deceiving. Cars that look good on the outside might not be so great under the hood.
Sellers won’t be upfront. Auctions are designed to give sellers a quick way to dispose of unwanted property and make up for financial losses. There’s not much incentive for them to level with you about a vehicle’s defects.
You can lose without a plan. If you don’t know beforehand which vehicle features are non-negotiable for you and what your spending limit is, you could be driven by impulse and end up with a bad deal.
Quality vehicles are buried among a lot of junkers. Many cars meet the end of the road at vehicle auctions. You’ll have to wade through many questionable prospects to find the the ones worth bidding on.
Plan to spend more than you think. Between repairs, shipping and buyer’s fees, you likely incur more costs that you realize. Have a margin set aside for unexpected expenses.
Representative example: Ben gets a used car from an auction
Ben, a resident of Ontario, wants to attend a car auction to find a cheap, used vehicle he can use to drive to work.
Because of his strong credit history, Ben’s bank approves him for a $8,000.00 unsecured personal loan. To participate in the auction, he’ll have to bring a bank statement with him to prove he has the money to back his bids.
Ben wins a $5,500.00 bid for a black 2013 Hyundai Elantra GL with 126,000 kilometres on it. He pays the price as well as a buyer’s fee of 15% ($825.00) and 13% HST. The title is transferred to his name, and the car is now his.
He registers the vehicle with the provincial government for $150.00, which includes the cost of a license plate sticker and vehicle permit (he can reuse his old plates, so he doesn’t need to buy new ones). After having the vehicle inspected, he ends up paying an additional $800 in repairs.
Between the bidding price, buyer’s fee, HST, repairs and registration costs, Ben pays around $8,100.00 total for his car ($100.00 of which had to come out of his savings). Models similar to Ben’s can sell for up to $8,000.00 before repairs and registration fees, so he seems to have gotten a good deal. However, if he had placed a higher bid, or if repairs had been more expensive, he could have ended up spending more than if he had simply bought from a dealership or a private seller.
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Total loan cost
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*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
You may be able to save thousands on a new-to-you car by heading to an auction instead of the dealership. But like with any used car purchases, you’ll need to thoroughly inspect the car and vehicle history report to ensure you don’t end up with a lemon.
Not sure whether you should buy a used vehicle at auction or a new vehicle from a dealership? Check out our guide to learn more about new versus used vehicles, so you can decide which choice is right for you.
Frequently asked questions
Generally, no. Typically, the only type of auctions that sell new cars are dealer auctions — and these are usually closed off from the general public. You’ll need a dealer’s license to participate.
Unless the car you bought came with a warranty, the seller may have no legal obligation to give you a refund or any compensation for a defective car. This is why it’s important to make as thorough an inspection as possible before bidding.
Although most provinces and territories have laws allowing a “cooling off” period in which you can change your mind about a purchase after it has been made, these laws often don’t apply to vehicle purchases. However, you should check your provincial consumer protection laws to find out exactly laws apply to you.
Ezra Wolfgang is a graduate publisher for Finder, helping readers compare providers to choose the best for their needs. Prior to joining Finder, Ezra interned on the assignment desk at ABC News in New York, where he helped find, develop and write breaking news stories. Ezra earned a BA in media studies from Hunter College, where he took a healthy dose of courses in film/documentary production, print and digital reporting and studio television. In his spare time, Ezra goes on the occasional run, takes photos, writes scripts and shoots his own tiny, short films.
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