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How to buy a car at an auction

You could score a great deal - but without conducting a thorough inspection, you might get stuck with a lemon.

Looking for a bargain on your next used vehicle? At car auctions, you bid against other buyers instead of negotiating with dealers. Unlike shopping at a dealership, you usually can’t get a refund on cars bought at an auction and you often won’t get a vehicle warranty either. Make sure you thoroughly check the condition of any car before bidding on to avoid ending up with a raw deal. With some background homework and some good luck on your side, you could end up driving home a steal.

Is buying a car from an auction a good idea?

Buying a car from an auction can yield mixed results. In some cases, you could drive off with the best steal at the auction, securing a rare vehicle at a great price, or you could end up inheriting a lemon that needs constant repairs.

How well you will fare at buying a car from an auction depends on you doing your homework before buying and, well, a bit of luck.

Here are some key factors to keep in mind when deciding on buying a car at auction:

How does the auction process work?

Gavel and model car on a deskAuction 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.

Compare car loans to buy a used car at an auction

Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
300
Min. income of $2,000 /month, 3+ months employed
Get a new or used vehicle delivered to your door.
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
Loans Canada Car Loans
$500 - $35,000
0% - 29.99%
3 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Compare rates from multiple lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
AutoLoanProviders
$7,500 - $85,000
3.99% - 29.99%
12 - 96 months
300
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
Coast Capital Car Loan
$10,000 - No Max.
Varies
18 - 84 months
650
Able to service debt payment of $300/month
Competitive rates and flexible terms.
Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
Splash Auto Finance
$10,000 - $50,000
9.90% - 29.90%
24 - 84 months
300
Min. income of $2,200 /month, 3+ months employed
Apply with any credit score.
Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
goPeer Car Loan
$1,000 - $25,000
8.00% - 31.00%
36 - 60 months
600
Min. income of $40,000 /year
P2P platform with competitive rates.
Canada's first regulated consumer peer-to-peer lending platform that connects creditworthy Canadians looking for a loan with Canadians looking to invest.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
High application approval rate.
Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
Canada Auto Finance
$500 - $45,000
4.90% - 29.95%
3 - 96 months
300
Min. income of $1,500 /month, 3+ months employed
Get financing from partnered local lenders.
Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
LoanConnect Car Loans
$500 - $50,000
9.90% - 46.96%
3 - 120 months
550
No min. income requirement
Pre-approval in as little as 60 seconds.
Get access to 25+ lenders through this brokerage. Get your funds in as little as 24 hours.
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Compare up to 4 providers

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).
  • Registration papers.
  • 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.
  • Cash. If you have enough money saved up, it might be a good idea to pay for the vehicle directly with cash. At some auctions, this can be the only option to pay.

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.

What you should know about buying a car at an 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. Don’t let looks deceive you and pay attention to the overall health of the car, including wear and tear, need for repairs and how much mileage its already cropped up.
  • 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. Buying anything at an auction, including cars, takes patience. Many cars meet the end of the road at vehicle auctions. You’ll have to wade through many questionable prospects to find the ones worth bidding on.
  • Plan to spend more than you think. Between repairs, shipping and buyer’s fees, you’re likely to incur more costs that you realize. Factor in the total cost of your purchase, including these extra expenses after your auction purchase, and make sure you have enough in your budget to afford your new car.

Representative example: Ben buys a used car from an auction

Man shaking hands with a car salesman at a dealershipA young man smiling in a carBen, 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.

Cost of used car$6,325.00 ($5,500.00 bid price + $825.00 buyer’s fee)
Loan typeAuto loan (term loan)
Loan amount$8,000.00
Interest rate (APR)7.90%
Loan term3 years
Additional fees4.00% origination fee ($320.00)
$0.00 application fee (waived by lender)
Payment $250.32 monthly or $115.35 biweekly
Total loan cost$9,011.52 with monthly payments or $8,997.30 with biweekly payments

*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.

How do I prepare for a car auction?

If you’re new to the auction game, preparation is key to helping you get a good deal. Here’s what you can do to set yourself up for success:

Are there online car auctions?

Yes, you can buy a car at an online auction. In some cases, the virtual route may be a better choice for first-timers because in-person auctions can be pretty intense.

Online auctions operate in a similar way to in-person ones. You’ll need to register ahead of time and you can search through the listings so you can home in on the vehicles you’re most interested in. The auction should list important information, such as the model of the car, the year of its make, its mileage, condition, fuel and transmission.

You can also control your search parameters with online auctions so you’re only shown cars within your price point or other desired features. If you set a budget, the auction platform won’t show you any vehicles priced above your maximum allowance.

Bidding is done virtually and held over a set period of time. This gives you time to research the car, check out its specs, and watch for competitors bids. If you place the winning bid, the car is yours.

Do your homework on auction fees and guidelines on payment, so you are prepared to make your purchase. You should also make sure you’re joining a legitimate auction that vets its vendors carefully.

Bottom line

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.

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