As a vehicle auction broker, we are often asked for advice about how to pay for the vehicles people wish to purchase. We only take our funds for vehicles by secure transfer since we use the money available to pay the auction house directly on time. As a result, if you wait until after you have won a vehicle to start thinking about how to pay for it, you may be waiting too long. It is best to think about your options and arrange a payment plan for yourself before you ever enter the auction process.
1) Paying Out of Pocket
The cheapest way to pay for any vehicle is to pay straight out of pocket. Paying the required cash up front means that you only pay the listed price, rather than interest or related fees. Even when it is an option, many auction houses and brokers will remove discounts if vehicles are paid by credit card to account for how long it can take to access these funds. Also you avoid the possible late fees from waiting for your funds to be made available to you, or potentially even worse losing the vehicle for not paying quickly enough.
2) Financing a Vehicle
Our small brokerage is not able to offer financing to our customers, but as we noted with insurance in an earlier blog, it is possible to get financial support for a used car, even one with a salvage title. The most important thing to remember is that with a salvage vehicle and to a lesser extent with used cars in general, you cannot use the car itself as collateral. When you finance a new car, the lender usually holds the car as a guarantee the loan will be paid, but with a used car most financial companies will not do that. So you should talk with your bank well in advance of purchasing if you think you may require a loan. However, if your credit is good enough and you have a history of loan repayment it is likely the loan would be approved.
If you do go out and get a loan to pay for the vehicle, be absolutely certain the item you are purchasing is worth it. Make sure that any repairs needed can be covered by what remains. Often this means inspecting the vehicle yourself or having a certified mechanic do it for you. Also make sure the original damage report is available to you. Depending on your state, the original damage report maybe compared to the repairs completed as part of removing the branding. It is important to remember that if you do buy a salvage title vehicle using money from a loan you will need to repay the loan even if you cannot get the branding removed.
In general, the best thing to do is to stay within your budget when buying a vehicle, purchased new or from an auction. Calculate your budget based on both the money you have and the money you can easily manage repaying. When figuring out how to pay for you vehicle remember that paying quickly and with secure funds is a great way to avoid additional fees. So even if you do choose to acquire financing for your vehicle try to secure the money before you even bid. For additional information on how to finance a salvage vehicle, talk to your local bank about your options.