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How To Buy A Repossessed Car: A Complete Guide

Last updated 04/02/2024 by

Benjamin Locke

Edited by

Buying a repossessed car can be a cost-effective way to acquire a vehicle, offering the chance for savings. However, it’s crucial to approach the purchase with caution, conducting thorough research and inspections to avoid potential pitfalls. This article outlines the benefits, considerations, and various sources for purchasing repossessed vehicles, providing a comprehensive guide for interested buyers.
Repossessed cars can be cheaper, but the buying process requires caution. The main benefit of buying a repossessed car is its lower cost. Lenders sell these cars cheaper to quickly recover their losses, offering buyers a chance to save some cash. Repo cars are sold as-is, meaning you cover all future repair costs. This can lead to unexpected expenses, especially if you’re not prepared financially. Some repossessed cars are well-maintained, reflecting the previous owner’s care despite financial troubles.

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How to buy a repossessed car?

Purchasing a repossessed car involves a strategic approach to ensure you get the best value for your money. It’s not only about where to find these vehicles but also about understanding the nuances of the buying process. Below is a comprehensive guide to navigate through the purchase of a repossessed car effectively.

How to Buy a Repo Car

Buying a repossessed (repo) car can be a great way to snag a deal on a vehicle. Here’s a quick guide to navigating the process.
  1. Research where to find repo cars, like banks, online auctions, or car repossession companies.
  2. Conduct a thorough check of the vehicle’s history using its VIN.
  3. Inspect the car personally or with a professional mechanic to identify any potential issues.
  4. Understand the sales terms, auction rules, and any applicable fees.
  5. Arrange financing beforehand if you’re not paying in cash, keeping in mind that some lenders may have reservations about financing repo cars.
  6. Participate in the bidding process or negotiate a purchase price, sticking to your budget and considering additional costs like repairs or registration fees.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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Identifying sources

Start by identifying where repossessed cars are sold. Key sources include (comprehensive list further down in the article):
  • Government agencies: These may include local police departments or federal agencies that auction vehicles seized in operations or for debts.
  • Car repossession companies: Specialized firms that recover vehicles on behalf of lenders often sell these cars at auctions or directly to consumers.
  • Salvage yards: Some repossessed vehicles, especially those considered ‘total losses’, may end up in salvage yards.
  • Banks and financial institutions: Many banks sell repossessed cars directly on their websites or through auctions to recoup losses on defaulted loans.
  • Online auction sites: Websites like eBay Motors, Auto Auction Mall, and Copart list repossessed vehicles for auction.
  • Local car auctions: Keep an eye out for local auction houses that may periodically offer repossessed cars.

Conducting due diligence

Before making a purchase, it’s crucial to conduct thorough due diligence:
  • Verify the vehicle’s history: Use the VIN to check for any past accidents, service records, and previous ownership through services like CarFax or AutoCheck.
  • Understand the sale terms: Familiarize yourself with the auction or sale terms. Look for any no-return policies and warranties (if any).
  • Check for liens: Ensure the vehicle is free of any liens, which are legal claims against the car due to the previous owner’s unpaid debts.
  • Consider depreciation: Evaluate how much the vehicle will depreciate over time and how this affects its future resale value.

Inspecting the vehicle

Inspection is a key step in the buying process:
  • Test drive: If possible, test drive the car to assess its performance and condition.
  • Professional inspection: Have the vehicle inspected by a certified mechanic to uncover any potential issues that might not be visible to the untrained eye.
  • Assess repair costs: Estimate any immediate repair costs and factor them into your budget.

Understanding financing and payments

Financing a repossessed car can differ from a standard vehicle purchase:
  • Explore financing options: Some financial institutions may be hesitant to finance repossessed cars. Shop around to find lenders who specialize in this area or consider paying cash if feasible.
  • Calculate total costs: Beyond the purchase price, consider additional costs such as taxes, registration fees, and any necessary repairs or modifications.

Completing the purchase

Once you’ve done your due diligence and decided to proceed:
  • Prepare the paperwork: Ensure you have all necessary documents, including bill of sale, proof of insurance, and any transfer documents for the title.
  • Understand the auction process: If purchasing at an auction, familiarize yourself with the bidding process to avoid overbidding or missing out on the car you want.
Buying a repossessed car can be a great way to save money on a vehicle purchase. However, it requires careful planning, research, and inspection to ensure you’re making a wise investment. By following these steps, you can navigate the process more confidently and secure a deal that meets your needs and budget.

Things to consider before buying a repossessed car

Before you buy a repossessed car one should give it careful consideration. The table below explains some common things to look out for before making the jump into repo land.
Verify Vehicle HistoryUse the VIN to get a report detailing past accidents, service records, and recalls.
Understand the Sale TermsRead the sale terms carefully, noting any no-return policies.
Check for LiensEnsure there are no legal claims against the car due to the previous owner’s debts.
Consider DepreciationAssess how the car will depreciate over time and its impact on future resale value.
Test Drive and InspectionTest drive the car and get it inspected by a mechanic to uncover potential issues.
Research Market ValueCompare the car’s price to similar models to ensure you’re getting a good deal.
Prepare for Additional CostsAccount for immediate repairs, modifications, and long-term ownership costs.
Legal and Registration PaperworkEnsure all legal and registration documents are correct and complete.

Pro Tip

“When buying a repossessed car, remember to check the condition .It’s smart to have an expert check it out too, to catch any problems you might miss. Find out who owned it before and if it’s been in any accidents. Also, think about financing because some banks might offer loans for repossessed cars. Make sure you understand all the details, like how much you’ll pay back and when.” – Chris Purvis, CEO & Founder | RDW Kenteken.

Places to find a repossessed car

Sources for purchasing repossessed vehicles

When looking to purchase a repossessed vehicle, it’s important to explore a variety of sources to find the best deals and options that suit your needs. Below, we outline some common places to find repossessed cars and provide tips on evaluating these sources effectively.

Car dealerships

Dealerships sometimes offer repossessed cars acquired through trade-ins or auctions. While they can provide a convenient option with potential warranties, it’s wise to compare prices and inquire about any post-sale support offered for these vehicles.

Banks and lending institutions

Financial institutions often sell repossessed vehicles to recover losses from defaulted loans. These can offer good deals, but ensure you understand the purchase terms fully. It’s beneficial to build a relationship with bank representatives who can alert you to upcoming sales.

Online auction websites

Platforms like eBay, Copart, and Manheim offer a wide selection of repossessed vehicles from across the country. While bidding online, research the vehicle’s history thoroughly and be aware of additional fees.

Government agencies

Government auctions can be a source for vehicles seized in legal actions. These might include cars with less wear and tear. Always check the vehicle’s condition and legal status before bidding.

Local car auctions

Attending local auctions allows for personal inspection before purchase. Familiarize yourself with the auction process ahead of time and set a strict budget.

Car repossession companies

These companies specialize in selling repossessed vehicles. Verify the company’s reputation and inspect vehicles carefully for a transparent transaction.

Salvage yards

For those willing to put in extra work or looking for parts, salvage yards can be a treasure trove. Inspect these vehicles in person and consider the restoration costs.

Online classifieds and public notices

Platforms like Craigslist and AutoTrader, along with local newspapers, often list repossessed cars. Exercise due diligence to avoid scams and ensure the car’s condition matches the advertisement.

Evaluating your sources

When considering a repossessed vehicle from any source, it’s crucial to:
  • Inspect the vehicle thoroughly or have it inspected by a professional.
  • Check the vehicle’s history using its VIN for past accidents, service records, and any liens against it.
  • Understand the sale terms completely, including any as-is clauses, return policies, or warranties.
  • Consider the total cost of ownership, including potential repairs, insurance, and registration fees.
Exploring a variety of sources and conducting thorough due diligence can lead you to a repossessed vehicle that offers significant savings without compromising on quality and reliability. Remember, patience and research are key to finding a great deal in the repossessed car market.


Can I finance a repossessed car?

Yes, you can finance a repossessed car, but options may vary depending on the lender. Some financial institutions might be hesitant to offer loans for repossessed vehicles due to their uncertain history. It’s advisable to check with multiple lenders, including those that specialize in used or repossessed car financing, to find the best rates and terms.

Is there a return policy on repossessed cars?

Typically, repossessed cars are sold as-is with no return policy. Buyers are encouraged to conduct thorough inspections and understand all sale terms before making a purchase. Some sellers might offer a short-term warranty or guarantee, but this is not common practice.

How can I avoid overbidding at a repossessed car auction?

To avoid overbidding, set a strict budget before attending the auction and stick to it. Research the market value of the cars you’re interested in and factor in any additional costs such as repairs, taxes, and registration fees. It’s also helpful to attend a few auctions without the intention of buying to get a feel for the bidding process.

What should I do if the repossessed car has mechanical issues after purchase?

If the repossessed car has mechanical issues after purchase, you will typically be responsible for any repairs, as these vehicles are usually sold as-is. It’s important to have a contingency budget for unexpected repairs. Consulting a trusted mechanic for a thorough inspection before buying can help identify potential issues and avoid significant unexpected expenses.

Key takeaways

  • Repossessed cars offer significant savings but require careful consideration and due diligence before purchase.
  • It’s essential to verify the vehicle’s history, understand sale terms, check for liens, and consider depreciation to make an informed decision.
  • Prospective buyers can find repossessed cars through various channels, including car dealerships, banks, online auctions, and government agencies.
  • Before finalizing a purchase, inspect the car thoroughly, research its market value, prepare for additional costs, and ensure all legal and registration paperwork is in order.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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