How Do Car Auctions Work?

Published on
October 5, 2023

Ever thought about getting a car, but not through the usual dealership route? Welcome to car auctions—a place where you can grab great and used vehciles, often at a good deal. This guide is here to break down what car auctions are all about.

What Are Car Auctions?

Think of a car auction like a big car sale where you and others bid on cars. The person willing to pay the most gets the car. These sales can be organized by anyone—the government, car dealers, or even private groups of sellers.

How Does a Car Auction Work?

Here's the fun part. Cars are shown with a some info about them. People start making offers, and the price goes up. If you want the car, you'll have to bid higher than others. The person with the highest bid at the end gets the car.

Where Do Car Auctions Get Their Cars?

You might wonder where all these auction cars come from. Some are older cars people traded in for new ones, while others might have been taken back by banks, and some might just be from someone who collects cars and has too many.

Why are cars at auction so cheap?

Not all cars at auctions are super cheap, but many are more affordable. Why? Some cars might have been taken back by banks, or maybe a dealership had too many of a certain car. But remember, while you might get a good deal, there's always a bit of risk (which we’ll touch on below).

What are the pros and cons of buying a car at auction?

Getting a car at an auction can be a steal. But like everything, there are good and bad sides. You might get a great deal, but there might also be hidden issues with the car since everything's so fast-paced. Auction cars can be a treasure trove or a can of worms. Knowing the good and the bad can save you a lot of surprises.
Auctions can offer a wide variety of cars at potentially lower prices. Especially if a vehicle has a minor defect that's easy to fix, or if you're looking for a rare model, auctions can be gold mines.
It's easy to get swept up in the thrill of bidding and end up overpaying. Always do your homework, set a strict budget, and whenever possible, inspect the car or have a professional do it.


  • Affordability: Cars at auctions often come at a lower price than dealerships or private sellers.
  • Variety: Auctions provide access to a broad range of vehicles, from everyday models to rare finds.
  • Potential for Great Deals: With some research and patience, you can snag a car well below its market value.


  • Unknown Vehicle History: While some auctions provide vehicle reports, not all do. You might be unaware of potential issues or past accidents.
  • As-Is Sales: Many auction cars are sold "as-is", meaning you take on all the risks once the hammer drops.
  • Competitive Bidding: You could get caught in a bidding war and end up paying more than you intended.

Decoding Car Titles at Auctions

So you're thinking about venturing into car auctions? Great move! But before you jump into the bidding action, there's some essential lingo to get familiar with, especially when it comes to car titles. These titles are basically a car's resume, and just like job resumes, some have more colorful histories than others.

Salvage Title: The Lowdown

When a car has a salvage title, it means it's had some pretty significant damage in its past. Insurance companies label it a total loss, be it from accidents, weather damage, or other events. These cars often have tempting price tags at auctions. However, there's a catch: Getting them back on the road and insured might be more of a task than you'd expect. If you're considering one, it's smart to dig a bit deeper into its history.

Rebuilt Title: A Fresh Start

A rebuilt title indicates that a car, which once was branded salvage, has been fixed up and passed the necessary inspections to be deemed roadworthy again. In the auction world, these cars can look attractive since they've had some restoration. But remember, the quality of those repairs can vary. It's always a good idea to have the car checked out or get more information on the repairs before placing your bid.

Cleaning a Salvage Title: Upgrading its Status

In auction terms, transitioning a car from a salvage to a rebuilt title is like giving it a new lease on life. It's been through repairs, met specific standards, and passed inspections. The bonus? A car with a cleaned-up title is often easier to insure and can have ‌improved market value. However, always hold onto documentation of the repair process—it offers transparency and might be useful down the line.

The Car Auction Process

Alright, let's say you're ready to jump into an auction. What should you expect? From signing up to making that final bid, here's the rundown.

Registration and Preparation

First, you gotta sign up with the folks running the auction. They'll need some ID, maybe an address, and sometimes some cash upfront (don't worry, it's usually refundable). Do your homework on the cars available and figure out how much you're willing to spend.

How to Bid

This is where things heat up. You'll place your bid by raising a hand or, if it's online, by clicking a button. Stay sharp, know your max spend, and be ready to make quick decisions.

Reserve Prices

Some cars have a set minimum price. If no one bids that much, the car isn't sold. So, if you're wondering why a car didn't sell even though you had the highest bid, this might be why.


If you win a bid—congrats! Now you pay up. Depending on the auction, you can use cash, checks, or even bank transfers. Keep an eye out for extra fees.

What Happens After You Buy a Car at Auction?

You won the car—now what? If you bought it online or from a place far from home, you'd need to figure out how to get it. And of course, there's paperwork, like getting the car's title in your name.

Digital vs Physical Auctions

With more people turning to online shopping, car auctions haven't been left behind. Let's compare online auctions and traditional in-person ones.
Online auctions offer convenience. You can bid from anywhere, and they often have a wider selection. However, you're relying on pictures and descriptions, which might not reveal all the flaws. In-person auctions let you see and often inspect the car, but they require you to be physically present, which might be limiting.
There are several renowned online car auction sites, like eBay Motors and Copart. Always read user reviews, understand their fees, and if possible, visit the car or send someone to inspect it before bidding.

Tips For When You’re At An Auction

Auctions can be exciting, but when you’re there, you want to make sure you’re getting a good deal. Follow these tips when you’re at one so you can guarantee you drive away for a decent ride—at a decent price.

Here’s a full list of websites we recommend:

  1. eBay Motors
  2. Copart
  3. IAAI (Insurance Auto Auctions)
  4. Auto Auction Mall
  5. Cars and Bids
  6. Capital Auto Auction

Inspect the Vehicles

If possible, always take the opportunity to inspect a car before making a bid (when attending an auction in person). Here's what you should keep an eye out for:

  • Body and Exterior: Check for any dents, rust, or signs of an accident. Remember, repairs can be costly.
  • Tires: Make sure the tires are in good condition and don't need an immediate replacement. You want to avoid as many out-of-pocket costs as possible when you drive away with your new vehicle.
  • Interior: Smell the inside a musty smell could indicate a leak. Also, check seats, controls, and the dashboard for wear or damage.
  • Engine: Even if you're not a car expert, a quick look can show signs of potential problems, like leaks or corroded parts.
  • History Report: If available, this can show if the car's been in accidents or had other significant issues.

Tips for Buying a Car at Auction

Jumping into the auction world can feel a bit like diving into deep water. Here are some tips to keep you afloat and get the best deal:

  • Know the Value: Research the market value of any car you're interested in. This way, you won't end up overpaying.
  • Stay Calm: Bidding wars can get intense. Remember to breathe and stick to your budget. If you can’t get the car you’re looking for on that day, you can always try again.
  • Ask Questions: Don't be shy. If you're unclear about something, ask the auction staff.
  • Check Payment Options: Different auctions have different rules. Know what they accept (and any fees) before you bid.
  • Understand the Terms: Some auctions might have "as is" sales, meaning you're getting the car with all its problems. Know what you're agreeing to.

Navigating Auction Fees

Winning a bid feels great! But don't forget about the extra costs. Many auctions charge a buyer's premium, which is a percentage of the final bid amount. So if you bid $10,000 and there's a 10% buyer's premium, you'll pay $11,000 in total.
There might also be documentation fees, transportation costs, or even charges for online bidding. Always check the auction's terms and conditions, and factor these fees into your budget.

Ready, Set, Bid!

Car auctions offer an adventurous alternative to the traditional ways of acquiring a vehicle. Whether you're there for the thrill of the bid, hunting for a unique find, or just hoping to snag a great deal, there's a lot to gain from this experience. But remember, as with any adventure, it's best approached with preparation and knowledge. From understanding the importance of titles to anticipating extra costs and knowing how to spot potential issues with a vehicle, you're now armed with the essential info to navigate the bustling world of car auctions. So next time you hear the auctioneer's call, you'll be ready to bid with confidence and hopefully drive away with a gem of a find. Happy bidding!

About the Author: This article was crafted by the LOOP Marketing Team. Comprising of seasoned professionals with expertise in the insurance industry, our team is dedicated to providing readers with accurate, up-to-date, and valuable information. At LOOP, we're passionate about helping families navigate the world of car insurance, ensuring they get the best coverage at the most affordable rates. Learn more about our mission and values here.

For more insights on auto insurance and other related topics, visit our blog.

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