The impact of the Covid-19 lockdown has been quite negative on the economy, jobs and general household/business finances. This means the car auction scene is now more lucrative then ever. Due to car repossessions and businesses closing, there is a lot more stock to sell. This also means the people that do have access to cash or finance (yes, you can finance an auction buy) could potentially get the best deals. This can easily turn very ugly if you don’t know how to manage yourself before, during and after the auction. Here in below are the tips to consider if buying on auction.
- Research, investigate, inspect and get advise: Before an auction, there will be a list of all the cars that will be sold at the specific auction venue at a specific time.
- There will also be a VIEWING DATE AND TIME which is clearly outlined on the Auction company information place (Web, paper or call). Use this opportunity to properly view the vehicle you would have seen on the web or on a newspaper.
- If possible, take the VIN and go to the nearest dealer of that brand and get a ownership history.
- Check the value of the car you are interested in on the used car market. This will give you an idea of how much you would need to prepare BUT ALSO how much you should not go over when the actual bidding starts.
- If possible, get someone who is good at inspecting cars to go with you to inspect the car(s) you are interested in. You can request the Auction place to start the car so you can listen to it. Unfortunately you won’t be able to test drive the car. For non-runners, this might not be possible.
- FICA Documents: Auction houses will require the bidder to present ORIGINAL OR CERTIFIED COPIES of the specified FICA documents. There will likely be additional documentation which the Auction place would require as part of your registration (in addition to the deposit explained below).
- Prepare your finances: Unlike when you buying a car through a dealer, there is no sales person to assist you with securing the deal on the car you want to buy. You will have to raise the cash that best prepares you to get the car you want. Banks allow pre-approval finance for vehicle auctions. You will have to make this application preferably a few days before the actual auction. Most professional auction places have Finance Consultants on site to assist. Remember the auction bid DOES NOT INCLUDE VAT meaning the amount might seem low during the bid but it’s actually high when the VAT has been added. There is also possible additional costs which you might be required to pay e.g. Buyer Commission or Admin Fee after the bid is won. The auctioneer will more often than not lay the terms of additional charges prior to the auction starting, PAY ATTENTION before the Auction starts.
- Deposits: Auction houses want bidders to pay a Registration Deposit of between R8 000 to R12 000 depending on the terms of that auction house. The deposit terms and conditions can also mean ONLY one deposit per bidding vehicle, clarify this with the auction company. The deposit is paid prior to auction bidding after which you get your Bid Number, keep your deposit or card swipe slip safe. Some Auction places DO NOT ALLOW CASH PAYMENTS meaning you will either have to swipe your bank card (check your card limits) or do an electronic transfer. Regarding the Electronic Transfer, preferably do it a couple of days before the day of auction so it reflects on the Auction houses bank account. Should your bid be successful, the Deposit is used to offset the purchase price meaning you will pay the balance after the deposit is taken into account of the sale. Should your bid prove unsuccessful, the Auction house will have to refund you. Since its no cash payment, Deposit refunds (Credit card, EFT) can take up to 10 working days. DO NOT EXPECT CASH REFUNDS immediately after auction finishes.
- Be calm during bidding: You don’t have to be an expert poker player to know that you need to play your cards right and not get excited. The bidding announcer is usually fast when talking (or shouting) so you need to pay careful attention. There would be an AUCTION LIST for the day that lists the order of cars in the bidding process by stock number visibly displayed on the vehicle windscreen. Stick to the car you researched and made enquiries on and not get carried away with other bids. Follow the amounts as noted by the Bidding announcer and REMEMBER THE VAT (i.e. 15%) is not included on the amounts used during the bidding process. Don’t get carried away or become emotional when bidding as this will count against you. Remember this is not a matter of life and death. If you win it, brilliant, if NOT, there are more Auctions to come, BE PATIENT. The Auction house can also remove a vehicle from the auction list without prior notice. This usually happens if the bank/owner no longer wants the car to be auctioned.
- Winning Bid: Should you then end up winning the bid, you will have to collect invoicing documentation which you will use when paying or for the bank (if you applied for the pre approval). Remember your deposit will also form part of the payment. The invoice will show all monies that need to be paid i.e. VAT, Admin fee or any other. All amounts on the invoice MUST BE AS PER EXPECTATION OR AS PER TERMS CLARIFIED BEFORE BIDDING. You have a right to challenge any additional amount that was not clarified before the bidding started. ALWAYS USE KNOWN AUCTION PLACES as these are less likely to spring a surprise on you. Payment terms will be made clear prior to bidding (Read their terms of the Bidding Process carefully) and these will include when the balance of the purchase price must be paid and what means are used for the payment. Payments are not made to individuals that work at the Auction House, the invoice will be clear on who you are paying your monies to. Confirm ONLY with the Auction House Finance section on the correct process for payments. The Auction house will not release a vehicle unless the funds are cleared or appear on their account. Find out the timeframe from wining bid to paying the balance.
- Collection of car: After all payments have been made and the Auction house has approved collection, ensure the vehicle is still in the state as at the time you made the bid. If there are changes to the condition of the vehicle, the voetstoots clause can be challenged (see Consumer Protection Act – CPA). It’s best to also purchase WARRANTY on major mechanical parts if the vehicle was out of Manufacturer warranty (Remember the VIN check at Dealer will also show if the vehicle is still under warranty of not). Should it be out of warranty, its best to get an extended warranty policy to protect you.
- Registration of car: After winning the bid, you will be required to register the vehicle in your name or that of your nominated person. This is not done at the Auction place but its the authority of the Department of Transport and they have their own Terms and Conditions for vehicle registration. You should have a logbook of the vehicle, yellow form and signed letter confirming sale/ details of the previous owner/bank representative. You will also be required to do a COR – Certificate Of Roadworthy on the car you bought at a CERTIFIED Testing Centre (confirm with your nearest Department of Transport office). If the purchase was done through the bank, insurance will be compulsory however even if its a cash sale, its advisable to arrange insurance cover for the car bought. Do not use vehicle if the licence disk has expired or if the COR haas not been received. This is for your safety and also for legal and road traffic rules.