Sometimes these sales may be called insurance auto auctions (IAA) or a salvage auto auction. These are vehicles that are considered a total-loss and repairable salvage. Generally, mechanically inclined car enthusiasts participate in this type of auction. It takes experience and a good eye to spot a lemon from a car that is worth repairing.
How do the cars get there?
It can be really difficult to find out how some cars managed to show up in these auctions. Carfax is a possibility, but it will only provide some information. There are several reasons a car could end up with a salvaged title. It can be as small as the cost of repairing the issue outweighed the current value of the vehicle. Unfortunately, these vehicles can also have extensive damage like an issue with the electrical system due to flooding. This isn’t something a potential bidder will always know about. It’s a roll of the dice on whether the car is repairable.
Why are they being sold?
These vehicles have been totaled by insurance companies, obviously. However, some of these cars merely have minor issues or are worth more to sell than to crush at a scrap yard. These cars still have value to someone who wishes to put in the time to rebuild them.
Being sold in an insurance auto auction doesn’t necessarily mean a vehicle was wrecked. Insurance companies also total cars if they’ve been involved in a flood, fire, or damaged by thieves. It all boils down to whether the cost of the repairs outweighs the cost of purchasing a new vehicle.
When companies write a check to an owner, they’re purchasing the damaged car. IAAs are a way for insurance companies to recoup some of the loss from writing the owner a check. The insurance company then becomes liable for the vehicle and typically opt to sell the car if they can.
Can you and should you buy one?
As mentioned before, it’s important to understand that salvage auto auctions aren’t for everyone. A person who is mechanically inclined will participate in these auctions. Sometimes, insurance auction sales are only opened to licensed car dealers. Due to this, wholesale dealers are the most common buyers for insurance auto auctions.
When a car dealer purchases the car, they fix the damage and resell the car at a regular car auction or at their dealership. Insurance auto auctions are generally only opened to car dealers because they pay cash and take it away immediately. An individual may need a day or two to get the cash and may never return to claim the car.
Individuals that do go to auctions have to prove that they have enough money to complete the purchase if they won. These are car collectors and hobbyists. Hobbyists will repair a vehicle and put it back on the road because they know how to repair the vehicle for cheap.
Basically, it’s up to you if you want to purchase a car at a salvage auction. If you are not mechanically inclined, you might not know what you’re getting yourself into. If you are, be aware of the damage done to the vehicle. Don’t go into an auction blind. Buying a car in an insurance auto auction isn’t like regular auctions. It’s much easier to get in over your head with additional expenses.
