For someone looking to buy a used car on a small budget, a car auction sounds like an appealing proposition. You envision a scene with a fast-talking auctioneer and a plethora of cars at much lower prices than what a dealership or used car lot has to offer. What can go wrong? A lot, potentially. While it sounds like an ideal scenario for the cash-strapped shopper, it’s far from the safest car buying route to take. Before you plan your day in the high stress, fast-paced and high-risk environment of an auction, you need to understand how auctions work and the dangers that will accompany the potential savings.

Types of Used Car Auctions

Old cars at auction

Most car auctions are open only to licensed car dealers and the general public does not have access. It takes some research to find a public auction where anyone can come and bid on cars. Doing an online search or looking at newspaper listings is the best way to locate auctions where all are welcome. There are two major types of car auctions open to all: public auctions and government auctions.

Public Auctions:

Public car auctions will mostly contain cars that weren’t sold at a wholesale dealer auction. Usually, the cars found at a public auction are repossessed vehicles, old trade-ins, and even flood-damaged cars. You may also encounter some high-end cars that have been towed or abandoned. Can someone else’s loss be your gain? It depends.

Government Auctions:

At a government used car auction, you’ll find vehicles that were (you guessed it) previously used by government staff. This includes city and county vehicles like decommissioned police cars, utility trucks, vans, and buses. You may also encounter cars that have been confiscated due to criminal activity or violations by the previous owners.

Pros vs. Cons

auction cars lot camaro camry
These pristine auction cars look well cared for. A sweet deal is in there.


The greatest benefit to buying a used car from an auction is the potential cost savings. You may be able to find a diamond in the rough for much less than you would anywhere else. If you are mechanically inclined and feel confident in your ability to fix up a car yourself, you may be able to walk away with a bargain. Just remember that finding a good car at an auction is like finding a needle in the proverbial haystack. If you're a thrill seeker, enjoy the rush of an auction and do your research before you bid, it's possible to have a great experience and score a deal.

broken down auction car
Do your homework before you bid, but know that there's always an element of risk.


Although the idea of buying a car for such a low price is certainly tempting, you need to factor in the risks that come with buying at auction and the future costs that you may run into after the purchase. According to U.S. News and World Report, there are several drawbacks to buying from an auction. First, there are no U.S. laws in place that require the seller to disclose any issues with the car. This includes mechanical flaws and even standing recalls on the cars up for sale. The cars are sold 'as is' and in a lot of cases, what you see is not what you'll get. Of course, the seller wants the cars to look great, so they can get the highest price for them. The cars will look shiny, buffed and waxed but all that glitters isn't gold, especially at an auction. 

If you're interested in a specific car, you'll want to make sure you look up the car’s VIN before you bid. This will give you some insight into whether the car has had been rebuilt, had flood damage, or if there other red flags. If you're not able to check the VIN on an auction car, run the other way. 

cash handed over in front of parked cars

Another drawback to consider is that you may be required to pay for the car with cash. Some auctions will accept car loans but you'll likely still need to make the down payment in cash. Most auctions will not take payment on credit cards. Make sure you check the auction's website to see what payment they will accept. Even though the price tags might be smaller, it is still a lot of cash to cough up at one time. 

Finally, if you have your heart set on a specific make, model, trim or color, auctions will make it tough to get what you want. If you're open to looking at many different types of cars and are willing and able to do some repairs, it may be worth the trek to your nearest auction. 

What to Expect On-Site

Old cars at an auction

If you're up for the challenge of an auction, you should start preparing for what the atmosphere will be like. Car auctions move fast and can get overwhelming. Most will take place within a large space such as a garage or warehouse. You can expect to encounter a lot of noise, crowds, and exhaust. If you’re not good under pressure or don't enjoy stressful situations, we'd recommend steering clear of car auctions altogether.

crowded car auction
There's always a flurry of activity at car auctions. Remember not to overbid.

In this type of environment, it can be easy to get carried away and go above the price you were originally willing to pay. If you find yourself in this situation, your plan of saving money just went out the window. That’s not to say that there aren’t any hidden gems at auctions but you need to do research prior to auction day and have a game plan. 

When you arrive at the auction, you'll receive a showing list when you check in and you'll be able to plan your schedule around the cars you're interested in. Ideally, you'll want to have a chance to inspect the car that you want to buy. Unlike when buying from a dealership, car lot or private seller, you typically won't have the luxury of test driving the vehicle at an auction. This is why it's especially important to be thorough with the inspection. If you're not well versed in cars yourself, you'll want to bring someone who is, along to help. 


Used Car for Sale

If the car auction experience isn't your cup of tea (or makes you want a cup of something stronger) there are more traditional ways to buy a used car. If you do your research, you'll also be able to find some great deals with less risk of accidentally buying junk. The three most common ways to purchase a used car are: to buy from a dealership, a used car lot or a private seller. You will most likely encounter the best deals from the last two, but it's a tradeoff with the peace of mind you get by buying a certified pre-owned car from a dealership.

These three options will give you more time to do your due diligence before buying a car. You'll be able to compare cars, take a test drive and look up vehicle history reports at a more leisurely pace. To get a great deal, you should put some effort into researching price ranges for the specific makes and models you're interested in. The best way to do this before venturing out to see the car in person is to look at used car listings.

Whether you decide to dive into the auction experience or go through one of the traditional avenues, it's important to take your time, thoroughly inspect the car, and know exactly what you're getting for your money.

Get Local Deals on Used Cars Today