If you are in the market to buy a car but can't afford a brand new vehicle, then you have two other options to consider. The first of which is the used car market which can be a gamble, while the second option is a bank repossessed vehicle. Repossessed cars are vehicles that have been reacquired by banks from buyers who have defaulted on their loan payments. Somebody else's loss could be your gain in these kinds of situations, so we created a quick guide to help you understand repossessed vehicles and what to look out for when buying them.
What makes Repossessed units attractive?
One of the key factors that make a repossessed vehicle so attractive is its pricing. These relatively new vehicles are priced much lower than what the car initially sells for, while the pricing ranges from bank to bank, expect it to be about 20 to 30 percent lower. These vehicles can also be much cheaper than what private sellers value their vehicles at presenting a better value for money proposition. Banks may even also offer promo prices for these vehicles making them all the more enticing. These vehicles are also often already considered a loss by the bank and therefore are priced competitively in order for the bank to quickly reduce its inventory of vehicles as quickly as possible.
How does a vehicle get repossessed?
Repossessed vehicles go on sale because their previous owners could not keep up with their loan payments on the car. This means that these vehicles are only a few years old and often come with low mileage on the clock. The vehicles may also still be under warranty, however, keep in mind that what you see is what you get when it comes to repossessed vehicles, so there is no haggling when it comes to this situation. If a modified vehicle does come up for sale, the modifications on the vehicle will also come with it upon completion of purchase. Good for those looking for a project car or a vehicle that looks unique on the road.
How are repossessed vehicles stored?
There is nothing fancy when it comes to how repossessed vehicles are stored. They are often stored in large warehouses and are left there to gather dust. This means that once you see these units don’t expect them to be squeaky clean, so manage your expectations accordingly. When inspecting a repossessed unit at a bank lot, make sure to be as thorough as possible. It is important to note that in some cases the warehouse may not let you open up the vehicle or even start it and test drive it, so keep that in mind when buying a repossessed unit.
How to check a repossessed vehicle?
While the process varies from bank to bank, it is always a good idea to bring a trusted mechanic when inspecting a repossessed vehicle. Even if access to the vehicle is limited, a keen and trained eye will be able to spot future problems that the vehicle may have with just a visual inspection. A few telltale signs are leaks from the vehicle along with other damaged exterior parts, which could indicate that the car will need repairs after purchase. If the initial vehicle doesn’t meet your standards you can move on to the next type of vehicle of its kind that's available in the lot.
Where do you go to buy a repossessed vehicle?
If you are interested in buying a repo unit, you can check out the repossessed cars segment on our website. It will show you detailed pictures of the vehicle in the bank warehouses as well as basic information about them. This includes the mileage, key features, as well as the coding number of the vehicle. Another option you have is to check out bank websites as they will offer you a list of available vehicles that they have in their inventory, however, these websites may not often include photos of the actual units.
Having this kind of information will help you understand what you are getting into prior to inspecting the vehicle in person. Going to a bank warehouse is another option but you will need prior information to know which warehouses are open for viewing. It's still best to do some research to find out which bank has what warehouse open for viewing and what their inventory is like to see if the car you want is available.
What to do when you want to buy a repossessed vehicle?
It's the same process that comes with buying a second-hand or brand new vehicle. You will first need to do some research to find out if the car you want is available with your preferred bank. Make sure to research the market value of the vehicle of your choice to help you determine if you are getting a fair price for the unit.
Aside from this be prepared to bid for the vehicle you want. If you found a good deal for the car you want, chances are someone else has found it as well. In this case, you and the other person will have to bid for the unit. The winner of the bidding will then be able to take home the vehicle. It is important to note that there is also a minimum bid in place for every repossessed vehicle, this is the minimum price the bank wants to sell the car to you.
Be prepared to do a lot of paperwork. In the event that you won the bid for the vehicle, you will now have to deal with the paperwork. This will vary from bank to bank but expect to fill out a lot of forms. While there is a lot to do, the advantage here is that these vehicles will be considered as a full cash payment and you won’t end up paying interest on the side over time.
Are car financing options available for repossessed cars?
This will depend on the bank and the package that you choose, however, there are some that will offer financing options for repossessed units. The advantage here is that it, while there will still be interest charges, the monthly payments will be considerably lower as the price of the vehicle is much cheaper than its standard retail price. An auto loan can also be easier on your finances thanks to more affordable monthly payments. These loans can also come with other benefits such as vehicle insurance included in the package.
What are the risks of buying a repossessed vehicle?
When it comes to repossessed units, their condition can be uncertain. The banks that repossess these vehicles do it in an “as is” condition. This means that, how the previous owner left the vehicle, is what condition it will be in when the unit arrives at the warehouse. This makes it difficult to determine the condition of the vehicle as each driver has their own unique driving habits. Chances are, the vehicle you want to get might not be in a well-maintained condition and will require some servicing to be done before it can be deemed reliable. It is also important to note that the buyer will shoulder the risks, these include any defects with the unit along with the general quality of the car. You can’t return the unit to the bank after your purchase, so make sure to choose wisely. The bank is also no longer liable for any damages or defects that you spot after you purchase the unit.
Make sure to do your research, we can’t stress this enough in order for you to get the best possible deal. It won’t be an easy task as you will need to jump from website to website to hunt for a good condition vehicle with the best possible price. It might also entail hopping from warehouse to warehouse as well for visual inspects. Expect to also send out a lot of bids for units, as others may be eyeing the same vehicle as you. Be prepared for rejections as well as banks may reject your bid on a vehicle if it's below the minimum they want for the vehicle.
You will need to do your research to look for the best possible deal. This won't be easy as you might need to hop from website to website to get the best deal. It might event entail hopping from warehouse to warehouse. Expect to send out a lot of bids for units. Banks may reject your bid if it’s below their floor price which is the minimum amount the bank sets for each repossessed cars for sale.
Are repossessed vehicles recommended?
If you don't mind putting work in for researching the best deals out there, then a repossessed unit is for you. Buying a repossessed unit has its risks but if you do your research well and inspect the vehicle thoroughly before bidding you might have a great deal on your hands.