INTERNET CAR BUYING
In a nutshell, these assets were repossessed by banks for non-repayment, and there are very attractive reasons why you should consider buying them:
BELOW MARKET PRICE
Here’s a secret: banks want to sell acquired assets like cars ASAP. Why? Until a car sells, the bank has to shoulder all maintenance and storage costs, hence their willingness to sell at a steep discount. And given how quickly a vehicle depreciates, they want to offload repossessed cars before their value dwindles even further.
AFFORDABLE DOWN PAYMENT
You’ll still make a 20-30% down payment for your acquired vehicle, but since you’re buying it at a greatly reduced price, your DP will also be lower than if you were buying a brand-new vehicle. As such, bank-acquired cars are a great option for first-time car buyers or for those with very tight budgets.
EXCELLENT CONDITION
Think bank-acquired cars are all clunkers? Think again! BDO, for example, has an extensive list of 2014 vehicles that you can buy at a considerable discount. Remember, these vehicles were given up not because they were failing, but because the owners couldn’t pay for them anymore, hence their excellent condition.
OPTIONS, OPTIONS, OPTIONS!
Want an SUV or a sedan? Or perhaps luxury vehicles like Chevrolet, Mercedes Benz, or BMW? Whatever vehicle type or brand it is you’re looking for, a bank probably has it in their acquired asset inventory.
RAKE IN REWARDS POINTS
If you’re a customer of a bank and decide to buy an acquired car from them, you may qualify for their rewards program. And since you’re buying a high-ticket item, you can easily rack up a ton of points from the sale!
GOOD FOR THE ENVIRONMENT
Did you know that manufacturing a mid-sized car generates about 17 tons of carbon dioxide, one of the major greenhouses gases? Since bank-acquired cars are pre-owned vehicles, they’re not just kinder to your wallet but to the environment as well.
How To Buy A Repo Vehicle
The rising tide of repossessions hasn’t spared owners of high-end vehicles either, as BMWs, Jaguars and Cadillacs are well represented on repo lots around the country. Repossessed vehicles are sold from a wide range of venues, from financial institution parking lots and websites to auto brokerages and car auctions.
A Risky Proposition?
Shopping for a repo vehicle can be a trip into uncharted territory. The actual condition of the car, truck or SUV is always the big unknown. Vehicle histories aren’t always available, or may be incomplete – and repo vehicles usually lack warranties, although they can typically be purchased separately. If the car owner has been in dire financial straits, they may not have been able to afford regular service for their vehicle. Some have been known to stop maintaining fluid levels or to trash their cars as a parting message to their lender.
In the worst-case scenario, a bargain shopper may not be able to distinguish a repo vehicle from a salvage vehicle. By definition, a salvage vehicle has suffered damage equivalent to at least 70 percent of its value. It could be ready for the junkyard – or have just come from one.
Buying From A Dealer
Perhaps the easiest way to buy a repossessed vehicle is to visit a dealership that specializes in them. While the discounts you’ll get from a dealer may not be as substantial as can be had at an auction, buying from a dealership offers another upside. Without the high-pressure environment of an auction, buyers may be able to do a more thorough inspection of the vehicle.
Direct From The Lender
Another option for buying a repo is to inquire at your local bank or credit union, as some financial institutions offer repossessed vehicles for sale directly at a branch or on websites.
Some institutions will also sell repo vehicles for fixed prices. Buyers benefit in two ways, as they pay a fairly low price for a used car and get rock-bottom interest rates in the bargain.
Some institutions will also sell repo vehicles for fixed prices. Buyers benefit in two ways, as they pay a fairly low price for a used car and get rock-bottom interest rates in the bargain. So a consumer would be wise to ask how the car was repossessed. If a car has been abused, the credit union often won’t be selling it on its own — it’s usually taken to auction.
Buying At Auction
This is the classic strategy for buying a repossessed vehicle, and the way some savvy buyers have been known to reap the biggest savings.
Auctions also pose a special challenge to consumers. Vehicles in every imaginable condition are on the lot, and it can be hard to find a good one. Vehicle documentation is another issue. In many cases, that can be in even worse condition than the cars. One of the clear signs to walk away from a deal is a car with no title, which means a buyer may have problems proving ownership or licensing a vehicle for the road. A buyer might be told that the title is ‘in transit’.
Some auctions make the process a bit easier for buyers. At Greater Detroit Auto Auction, bank repos account for just a small portion of the 300 to 500 vehicles auctioned each week at his company, and they are clearly designated on its bid lists. Each comes with a vehicle history and a title in the bank’s name, with VIN numbers and pictures posted on Greater Detroit Auto Auction’s website. Creditworthy buyers can even head into the auction with pre-approved financing from a credit union affiliated with the auction.
Many auction houses even offer customers the chance to inspect and drive vehicles before the bidding starts. Interstate Auto Auctions in Salem, New Hampshire, for example, holds auctions on Wednesdays and Saturdays and gives bidders access to vehicles for several hours before each event.
