Likely though that car flippers aren’t buying repossessed cars
Yes, there are people out there buying repossessed cars, just like how people buy foreclosed homes.
Just like the housing market, there are people who stop making car loan payments and their car gets repossessed. Just like with foreclosed homes, the banks that lent the money in the first place want to get their money back somehow, which happens by selling the repossessed property to someone else who wants it.
Granted, there isn’t extensive data on how big a discount you can get. For relatively newer vehicles, a few thousand off the top isn’t atypical. Those keen on buying an exotic car can get larger discounts, but will still be paying a lot of money – after all, a Ferrari is still a Ferrari.
There are several ways you can get one.
How to shift the goods
According to a 2010 article from USA Today, repossessed cars take several paths after the repossession, so buying repossessed cars can take place in a number of forums.
Many banks and credit unions have a “repo list,” or an inventory of repossessed cars and trucks that they’re looking to get rid of. Some will allow you to buy directly from them, and since you’re already at the bank, financing shouldn’t be a problem. These will be of the best quality, as a bank or credit union isn’t going to sell an unsafe vehicle due to liability concerns.
Granted, this situation is optimal, as a third party that you have no idea whether you can trust or not is not involved. (Like a used car dealer. Many are fine, upstanding folks, but some are definitely not.)
Lenders often shift the inventory to a dealer or auction of some sort, which is where things get a bit more nebulous. Some dealers, according to the website TrustedChoice.com, specialize in repossessed vehicles; those interested should see if there are any in their area.
There are also auctions. Some are open to the public, some only to dealers. Finally, there are used car dealers, many of whom purchase repo vehicles to sell.
Where it all can go wrong
On the surface, buying repossessed cars makes about the same amount of sense buying a foreclosed home does. It’s a way to get something you want for less than MSRP. However, just like with buying a foreclosed home, there are risks.
For one, you might not know what kind of shape the vehicle is really in. Besides the bank repos that are well-documented (many of these repossessions are voluntary, with the cars well cared-for and in good running order) there are others which are not. It’s just like buying a used car; the vehicle is only as good as how it was treated.
Some of these cars were severely mistreated before the repo men came for the vehicle and some used car dealers are less than scrupulous. Since these vehicles are used, many are sold as-is, meaning it’s your problem if it explodes after you get a block away from the dealership.