A guide to repossessed cars in online car auctions

Repossessed cars occupy the middle of a strange Venn diagram for car buyers and owners. For car owners, a repossessed car is a very scary prospect, but for used car buyers it can be a dream come true, as it can mean getting huge savings on a car in near-perfect condition. Over 80% of the 2.7 million cars bought in 2016 were financed in some way, and it remains a big part of the way that people get their cars. For better or worse, that means there will always be a steady supply of repossessed cars in the UK’s used car markets. Here, we cover some of your most pressing questions about repossessed cars in online car auctions.

What is a repossessed car?

A repossessed car is one that has originally been bought on finance, such as a hire purchase or personal contract purchase. If the buyer fails to stick to the terms of the contract, or fails to make repayments, the entity financing the car will be entitled to take legal ownership of it. This is called repossession, and any cars that are reclaimed in this way are called repossessed cars.

Why might a car get repossessed?

Chiefly, a car gets repossessed if the owner fails to keep up with repayments, or breaches another key term of the finance contract. The important thing to remember is that a car has value, regardless of its age or mileage - and the newer it is, the more it’s worth.

Since the entity providing the finance (often a bank) is the legal owner of the vehicle until it’s been paid off, that makes it the most valuable asset they’ll reclaim first, in order to cover their lost revenue on missed repayments.

Even if the contract has been made between the owner and a car dealer, this contract will still generally be underwritten by a bank, so it rarely involves any of the dealer’s money. This means that whether the repayments are due to go to the car dealer or directly to the bank, a defaulting owner can expect to have their car repossessed either way.

However, it’s worth noting that this is only a final resort for the vast majority of institutions, and they’ll generally try to exhaust every other available avenue of repayment before settling on repossession.

What happens when a car is repossessed?

Once enough payments have been missed, or deadlines have passed, a bailiff will be arranged to collect the car from the owner. If the value of the car isn’t enough to recoup the costs of the missed repayments, they may also take additional property to make up the remaining value.

The repossessed car will then usually go straight to auction to recoup the money lost in missed repayments. These will often be specialist trade auctions attended by professional dealers, who will then stock them in retail car outlets. (This is why you’ll find countless repossessed cars in dealerships up and down the country, although they may not always look it!)

However, the repossessed cars usually won’t be released for sale until the finance company are satisfied they don’t have any interest in it beyond recouping its value as an asset. When a repossessed car goes to auction, it’ll be assigned a value, which becomes its reserve price. If the reserve price isn’t met, it may not be sold successfully the first time.

On the other hand, sometimes finance companies will be happy to sell the repossessed car for lower than its reserve value. This is largely to do with depreciation - the longer it goes without a buyer, the less it’s eventually worth and the more the finance company ultimately loses. Sometimes, it just makes sense to cut their losses early.

When a repossessed car is sold on, lenders can place markers on its official records, to demonstrate to new buyers that there are issues surrounding payments or ownership. This information is easily accessed by anyone using a HPI check, and it’s always something worth checking before buying a new car, especially in a private sale.

How can I tell if a car has been repossessed?

Since repossessed cars have typically passed through several hands since their original owner, there’s no way to tell at a quick glance. However, you can look into its records using an HPI check - for £20, you’ll be able to find out whether the car you’re considering has any outstanding finance.

This is important, as you’ll always want to steer clear of cars which are mired up in these kind of administrative issues. For starters, it means that whoever’s selling the car doesn’t have the right to do so, as it’s still technically owned by the finance company.

However, you’ll be happy to hear that’s not something you have to worry about when you buy a vehicle from our range of used, seized or salvage cars here at RAW2K. We’ll never put a vehicle on auction if it’s subject to any outstanding finance, so an HPI check isn’t something you’ll have to bother with when you buy from us.

Are there any issues with repossessed cars I should be aware of?

Basic maintenance is one of the key ones. If the original owner wasn’t able to keep the car, it’s likely maintenance will be one of the first costs they’ll have stopped covering. However, if you’re buying a used, seized or salvage car, you’ll likely be prepared to do a bit of fixing up on your new purchase anyway.

Some people will have eschewed main dealers for repairs in favour of going to small independent mechanics instead. There’s nothing inherently wrong with this, as the work of independent mechanics is often fine - however, it can lead to complications with warranties further on down the line.

The only other main issue is thankfully a rare one - very occasionally, they can be the subject of petty vandalism by the previous owner, in retribution against the finance company. However, this damage is rarely prohibitively expensive, normally limited to broken windows, missing electronics and scratched paintwork - all very par for the course where salvage cars are concerned!

Other than that, there are no particular risks associated with repossessed cars that wouldn’t normally be associated with other used, seized or salvage cars. As long as you know what you’re looking for and how to get it into the condition you want, the world is your oyster.

Is it worth buying a repossessed car?

Definitely! As we’ve touched on above, many repossessed cars are in perfectly functioning working condition, with some near-perfect models available in professional showrooms all over the UK. Thousands of people in Britain are driving round in cars they have no idea were once repossessed, and it often makes very little difference regardless.

As long as the original finance company has no further financial or administrative interest in the vehicle, it’s no different from any other used or salvage car. Aside from minor bumps and scrapes, they make perfect vehicles to fix up and sell on for a profit, or even use as your own personal motor.

Where can I buy a repossessed car?

You can buy repossessed cars pretty much anywhere, from professional dealerships to private sellers, right down to online vehicle auctions like ours. Online auctions are some of the best places to find the best deals, and that’s especially true of our auctions right here at RAW2K. Every vehicle in our online car auctions are clearly labelled with their relevant salvage category, and the details of any damage they may have suffered. Within our listings you’ll find plenty of key information at a glance, such as the car’s vehicle history, and whether or not it has keys or a logbook.

We’ve got makes and models from a huge range of instantly-recognisable names, from Renault and Peugeot to BMW and Audi. Why not take a look around our stock, and see what you can find?