Guide to Buying Repossessed Cars


    When a bank or lender retrieves a car after a borrower fails to make payments, what happens to the car next? Because banks aren’t typically in the business of selling cars, they often aim to offload the vehicle quickly. Whether you’re searching for a good deal or considering flipping cars for profit, learning how to buy repossessed cars could save you some cash.

    Is buying repossessed cars worth the savings?

    Just like purchasing a used car at an auction, where many repossessed vehicles are often sold, buying a repo car can be a great deal.

    However, remember that lenders must sell repossessed cars in a way that’s considered fair and reasonable. This means they have to sell the car at a price that reflects its value in your area and follow standard selling procedures, including methods, timing, location, and terms of the sale.

    So, while you can snag a bargain by purchasing repo cars, it depends on who you’re buying from and how eager they are to sell them.

    Where can you buy repo cars?

    There are many places to buy repossessed cars. Below are the most common options:


    Several banks and credit unions conduct auctions to sell repossessed vehicles to the general public a few times each year. These opportunities are often advertised in local newspapers, on the financial institutions’ official websites, and on various online platforms.

    To buy repo cars from banks, you must attend the auctions. During these auctions, the lender provides a list of available cars along with essential details such as the year of manufacture, make, model, mileage, and the deadline for submitting bids. It’s important to note that there’s typically no room for negotiation on the price of the vehicle itself. After submitting your bid, it may take several weeks before you receive confirmation on whether your offer was accepted.

    However, many lenders offering these repossessed cars also provide financing options to facilitate the purchase. This aspect allows some flexibility in negotiating the terms of the loan, such as the interest rate and repayment period.

    It’s crucial to understand that these cars are sold in “as is” condition, meaning they come without any warranties. As a result, any necessary repairs, whether cosmetic or mechanical, will be the responsibility of the buyer. Additionally, bidders usually don’t have the chance to inspect the vehicles before placing their bids. If your bid gets accepted, though, you’ll have the opportunity to examine the car before finalizing the purchase paperwork.


    When lenders take back cars, they often send them to auctions, especially if the car is damaged or neglected and the lender doesn’t want to fix it up.

    At auctions, there are lots of cars to choose from, giving buyers many options. If you go to a live auction, you can inspect the car before you bid. This lets you see if it’s been cleaned up and if there are any cosmetic fixes. But, keep in mind that live auctions usually require buyers to have cash or a pre-approved loan letter. You usually can’t get financing there.

    Online auctions work a bit differently. You can’t see the car in person before you bid, but some online sites offer financing options, especially if you have good credit. This can help people who need financial help buy a repossessed car.

    Car Dealership

    Many repossessed cars end up back at used car dealerships, where they blend in with the other cars for sale. Dealerships usually clean them up and fix any problems to make sure they’re ready to sell. They might also offer financing options right there at the dealership, making it easier for customers to buy a car and handling all the paperwork. Some dealerships might even give you a partial warranty to make you feel better about your purchase.

    But, repossessed cars at dealerships often cost more than ones sold elsewhere, because the dealership needs to cover its costs. Still, you can usually talk about the price and try to get a better deal when you buy from a used car dealership.

    Repo Company

    When lenders take back cars, they often get a repo company to sell them. It’s a lot like when the lender sells them, but the repo company handles it. Just like with lender sales, the repo company usually puts descriptions of the cars online. But, instead of auctions, they use a blind bid system. This means buyers send in their offers without knowing what others are offering.

    Along with basic info about the car, the repo company will also tell you about any fees for storing and getting the car ready to sell. These fees might include storage costs and other expenses. By telling buyers about these fees upfront, they know exactly how much the car will cost.

    Considerations Before Buying a Repo Car

    Buying a repossessed car might cost less than one from a dealership or private seller, especially if the lender wants to get back some of its money. But, repo cars are usually sold “as-is.” This suggests that they might not have received proper care from the previous owner, might have suffered intentional damage, or might have simply been lying around accumulating dust and damage. So, it’s important to be careful when you buy a repo car.

    Taking a Loan to Purchase a Repossessed Car

    When you’re buying a repossessed car from a lender or dealership, you can get a regular car loan, just like you would for any other car. This means filling out an application with your financial info and credit history for the lender to check.

    But if you’re buying from a repo company or at an auction, it’s a bit different. You can apply for a personal loan to pay for the car. Personal loans come from banks, credit unions, or online lenders. You still need to give them your financial details and credit history to see if you qualify. Once you’re approved, you can use the money from the personal loan to buy the repossessed car.

    Thinking about buying a repo car? Take your time and look at all your options, whether it’s buying from lenders, auctions, dealerships, or repo companies. Think about the pros and cons of each one. And don’t forget to check out the car really well before you decide. Whether you’re after a good deal or hoping to make money by fixing up cars, knowing how it all works and what your financing options are can help you make the right choice.