If you’ve ever considered how much cheaper buying a car at auction could be, wondered whether or not auctions are worth the potential hassle or just thought about how much money you could save if you were to buy your next car in the auction room, then this helpful guide on the ins and outs of car auctions is exactly what you need.

Are car auction prices cheaper?

Providing you carry out some all-important homework first, purchasing a car at auction can be an excellent way to acquire a used car at a low and affordable price. If you can keep a clear head and know your own mind when it comes to the car you’re hunting for, then auctions are worth considering. Additionally, to safeguard yourself and ensure you benefit from a lower sale price at auction, you should be prepared to run a full HPI vehicle history check prior to bidding.

Car auctions are regularly used by independent traders and car dealers to acquire suitable stock to sell. When buying a car at auction, the price can be cheaper than purchasing in a private sale or from a dealership because you efficiently cut out the middleman. However, you must be knowledgeable when it comes to both cars and auction procedures before you make your consider visiting the saleroom to buy your next car.

It’s sound advice to leave your money at home the first few times you visit a car auction and concentrate on getting a feel for the proceedings. Try attending three or four times before engaging in an auction and keep your eyes and ears open. Once the auction process begins to feel familiar and you become comfortable with the rapid rate of bidding, you’ll feel far more confident about placing a bid and driving away with a bargain.

If you’re not an expert when it comes to cars, we recommend always bringing someone along with the knowhow. This will ensure you avoid making any expensive mistakes by purchasing a vehicle that isn’t worth the money you paid for it.

How much cheaper are cars auctions?

As a rule of thumb, car auctions do represent a cheaper method of purchasing a used car, particularly when compared with buying through dealerships or private sales directly through an owner. Indeed, dealerships will often purchase their own cars at auction before fixing and cleaning them up as necessary, and then selling them on at a higher price tag. By purchasing directly at the auction stage, you’re effectively buying your car before any add-on value is attached by dealers and private sellers.

However, it’s worth bearing in mind that if you do buy a car at auction, you will have to pay auction house fees in the form of commission. This fee will vary but is usually around 5% (plus VAT) of the final sale price. Always double check exactly how much this fee will be and always be sure to deduct this value from any saving you feel you’d be making on your purchase.

While you may find a used car for a significantly cheaper price that you expected, you must remember that often if something looks too good to be true, it probably is. While you may think you’re driving away with the bargain of the century, hidden problems could prove very costly further down the line. There are, of course, ways to reduce your risks. For example, purchasing an ex-fleet vehicle is always a better option at auction than bidding on a car by a private seller tagged with ‘sold as seen’. Running a thorough HPI check on any vehicle that interests you is also an important tool that can help you avoid any costly purchases. If you are keen to see guide prices for a given car you can use Car.co.uk's car valuation tool for free where you can enter any vehicle registration and see the different price guides available.

Why do cars go to auction?

Cars end up at auction for a variety of reasons. While you may have seen or heard about well-known auctions for vintage and rare classic cars, for the most part the cars at auction are the kind driven everyday by your average motorist. Whereas the majority of vintage car auctions are arranged on behalf of a private individual, most vehicles up for auction originate from larger national chains.

Some of these auctioned cars will be ex-rental vehicles, while others could’ve been part of a firm’s fleet, acting as company cars to its employees. Part-exchange vehicles are also often found at auction too, mainly when condition, age and mileage are beyond the specifications required for a car dealer’s ‘approved used’ scheme.

A vehicle at auction could also have been repossessed. In this case, buyers should be particularly careful when scrutinising its condition and investigating its history. This is also true when it comes to bidding in Category D vehicles classed as insurance write-offs, which are also often disposed of at auction. Written off vehicles may feature visible damage, although this may be less noticeable if repaired before going under the hammer. Selling cars in both of these circumstances is completely legal but it’s vital that you know the specific reason why the car was written off. And remember, if you plan to resell the vehicle, it’s vital that you disclose this information to any future owners.

Are car auctions good?

If you purchase your car through a dealership or from a private seller, you’re typically covered quite well, but this isn’t the case with auctions. Buying cars under the hammer carries the ‘buyer beware’ rule.

Unlike buying from a dealership, you won’t get to test drive the vehicle that’s being auctioned. Cars will be unlocked and started just before the auction takes place, but it will be up to you to watch out for any warning lights appearing on the dashboard or discoloured exhaust fumes coming from the car. You’ll also have to possess a good ear to listen to the engine and be able to recognise if there’s any potential mechanical issues.

While auctions can offer you an opportunity to snag yourself a bargain, there’s a good chance that some of the vehicles up for sale may be cars that dealers are keen to be rid of. Always remember that if the worst comes to pass, you could end up having to resell the vehicle at a loss or pay the price of costly repair work.

Professional car dealers and auto traders purchase cars in bulk at auction because they’re able to enjoy the advantage of auction house discounts to which individuals aren’t privy. Bulk buying at discount allows them to absorb any losses caused by a bad car in a lot and still make a saving at auction. Such a loss, while affordable to dealers, will have a much harder impact on an individual buying a car at auction. Not only will you not benefit from auction house discounts, but you’ll face the house fees that will be subtracted from any potential savings you may make in comparison to purchasing a car through more traditional methods.

However, if you’re aware of the risks and happy to take them, and feel like you know cars well enough to bid and buy, then auctions could well be for you. If you’ve spotted a car you know is rare at auction and don’t feel you’ll be able to find it through conventional channels of buying, this is another case in which auctions may be a good option.

What price do cars sell for at auction?

Just like cars at dealerships and those for sale privately, cars at auction sell for a diverse range of prices depending on make, model, age and condition. Cars often begin at auction for low prices but can rapidly increase in price with the fast-paced auction-style bidding. Always remember to have a fixed sum of money in mind to spend on a vehicle at auction before taking part. It’s easy to get caught up in bidding when it’s increasing at only £50 at a time, but this soon adds up. Once you’ve gone over your limit, it might be tempting to continue bidding, so always stick to a maximum bid to avoid paying over the amount a vehicle is worth and stepping outside your affordability.

You’ll discover many cars priced below £2,000, and the majority of these will be put up for auction privately and ‘sold as seen’. Often, these vehicles are entered at auction by dealers because they have auto-mechanical failures. They won’t have a warranty and, if you purchase them, they can’t be returned and you’ll receive no financial compensation if you find they have a problem. Always make sure you check the auction house terms and conditions before placing any bids on offered vehicles.

If an auction is poorly attended, it can sometimes be possible to secure a car for a very low price. With little competition at an auction, you won’t have to repeatedly raise your bid, making it possible to secure a bargain.

If you successfully acquire a car at auction, you’ll be asked to instantly pay a deposit of either £500 or 20% of the vehicle price - usually whichever sum is more. Both cash and debit card payments are accepted and the balance of your payment can typically be made either by debit card or bank transfer backed up with two forms of personal identification. Paying the remaining balance by cash or credit card both carry fees payable to the auction house and are worth avoiding.

Remember that the payment must be made in full to the auction house, and funds must clear before you can drive away in your new car. It’s therefore best to arrange this quickly, as any car kept on the premises awaiting transport will likely incur a daily charge.