How Much Do Dealers Pay for Cars at Auctions?

Cars are normally sold at specialized car auctions, often referred to as auto auctions. Vehicles are sold quickly with little hassle. Typically cars are sold at low prices that can be recouped in the resale of the vehicle, although the quality of the vehicles on sale varies greatly. The price dealers pay for cars at auction varies with the age and model of the vehicle, the level of repair required before retail and the type of auction where it is sold.

As a dealer, if you buy a car at an informal, or back street, auction, prices start as low as $300, with cars rarely rising above $3,500. The cars at informal auctions are sold by individuals, not manufacturers. They are normally more than five years old and have been purchased for resale, having been simply repainted or repaired. Bidding is slow and vehicles often are auctioned several times, with the original seller pushing up the price by buying the car himself the first time around. Experienced dealers often pick up bargains at back street auctions, but if you lack experience, it is easy to pay a high price for a low-quality vehicle. Be sure to check the vehicle's service history before you buy a car, as many sellers will simply improve the aesthetics without improving the function of the car itself.

Formal auctions are professionally run with cars being sold quickly and efficiently using a catalog system. Typically, cars are entered by dealers, lease hire companies and manufacturers. With the exception of the occasional old junker, prices start at $3,000, with top-quality cars selling for more than $10,000. Some cars, such as those sold by leasing companies and as part of disabled access (Motorbility) schemes, are only three years old. Dealers buy the majority of their cars at formal auctions, due to their quality and professionalism. If you are buying a car at a formal auction, remember to make allowances for mileage and to view the engine when it is cold. Take an experienced mechanic or dealer with you to gauge the quality and potential of the vehicle.

At formal car auctions every car has a title guarantee. This is approximately $150 and is added to the price after the car has been auctioned. It is a type of insurance that means the purchase price will be refunded if the car was sold illegally.

Prices vary depending on whether the car at auction is domestic or imported. Generally, imported cars sell for higher prices. For example, a U.S.-made 2007 Ford Taurus Sedan SE sells for an average of $9,363, whereas an imported 2007 Hyundai Sonata Sedan V6, with approximately the same number of miles, sells for an average of $12,847.