Many home seekers have discovered bargain houses by pursuing real estate owned (REO) properties through local banks. These dwellings were repossessed by the lender after foreclosure proceedings. In truth, they are a headache for banks to maintain, thus lenders make deals to off-load them.
What few people realize is that repossessed automobiles are plentiful as well. For this reason, financial institutions pursue venues where they can cut their financial losses and try to recoup some of the collateral value of these reclaimed vehicles. This is sometimes done on an individual basis. Alternatively, banks will employ local auctions to do this.
Look Before You Jump
A word of caution is in order: repo car seekers do not have the benefits afforded by a dealership. Banks do not expect to make large profits from used cars. They are more interested in mitigating their losses. Needless to say, they are less interested in bargaining and haggling with buyers.
Another point to sober eager purchasers: Many of the vehicles are in less-than-stellar condition. At times, proper maintenance has been neglected.
In other instances, the car was intentionally abused by the previous owner who may have been bitter about the repossession. Lenders, meanwhile, are unlikely to invest in restoration. All this is to say that the automobile may need some work even under the best scenario.
Negotiating with the Bank
Those who would rather avoid the cross-bidding typical of auctions may choose to buy from the lender directly. Not all banks make this a practice so buyers may have to call around. Those that do may allow interested parties to peruse the bank repo list or credit union repossessed cars for sale roster.
Since the institution is more interested in getting rid of the vehicle, inquirers can acquire it at a discounted price. Moreover, the lender may offer reasonable financing terms. Although this is not an auction forum, the bank may have other offers on the table so a bid must be made.
In doing so, buyers are well-advised to consult the National Auto Dealers Association (NADA) guide for the low value of the make and model. This can be discovered at nadaguides.com. Given the fact that the car may suffer some damage, that figure should serve as a benchmark. If the bid is successful, you are usually allowed a cursory inspection before signing the deed and paperwork.
For those concerned with the vehicular condition, a repo reseller service can be an attractive option. These dealers do not purchase wholesale and sell retail. Instead, they broker the resale on behalf of the bank that owns the car. More to the point, resellers set a threshold for the physical and mechanical shape of their automobiles; some even perform minor renovations. These services are easily found online.
Searchers should be discerning and eschew those firms that charge for viewing or require any money in advance. As with a bank, consumers can bid on their preferred automobile and evaluate the car before closing the deal.
Bidding at Auctions
Auctions of confiscated automobiles can be sponsored by state, local and county police departments. For example, New York City hosts frequent auto auctions. Lenders, too, can hold local auctions if their inventories of repossessed vehicles are sufficient.
Public notice of auctions can be found in periodicals and websites focusing on local news. Many require registration to participate. One thing to note about such events is that private used car dealers will be in attendance, making the bids more competitive than one might think. Nevertheless, the starting prices for a repossessed car auction are lower without any middlemen.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.