How to Buy Repossessed Cars: Complete Guide for Beginners

People prefer to buy repossessed cars because buying a brand-new car is expensive. Repossessed cars are those that banks, lenders, or financial institutions take back when someone cannot pay their loan. The lenders or banks want to get their money back quickly. That is why they usually sell them at a lower price. In this guide, I have summarized the ways to buy repossessed cars, tips for safe purchasing, and the pros and cons of repo cars. If you are planning to buy a repo car, read it completely.
Table of contents
- What Are Repossessed Cars?
- Why Buy Repossessed Cars?
- Where Can You Buy Repossessed Cars?
- How to Buy Repossessed Cars Step by Step
- Can You Get a Loan for a Repossessed Car?
- Pros and Cons of Buying Repossessed Cars
- Pro Tips for Success in Repo Car Buying
- Should You Buy a Repossessed Car?
- Conclusion
- FAQs
What Are Repossessed Cars?
If you are buying repossessed cars, you should be aware of what they are. A repossessed car (or repo car) is a leased vehicle that a bank, credit union, or lender takes back if the owner fails to pay the loan. After repossessing the car, the lender attempts to sell the car as soon as possible to recover the price. Here are some key things that you should know about the repossessed cars:
- They are usually sold without any warranties or guarantees.
- The prices of repo cars are often lower than the actual market value.
- Some repo cars are well-maintained, while some need quick repairs.

Why Buy Repossessed Cars?
Many car owners show interest in repo cars and are always on the lookout for repossessed cars. The reasons behind this are listed below:
- Lower Price: Repo cars are often sold at a discount because lenders want to recover their money quickly.
- Variety: You can find sedans, SUVs, trucks, and even luxury cars.
- Financing Options: Some lenders and dealerships offer auto loans for repo cars.
- Quick Sales: Auctions and repo listings move fast, so you can buy a car sooner than expected.
Despite all these positive aspects, repo cars are not always perfect to buy, and you need to be careful. Many repo cars are sold without inspection or repair and may have critical issues. Moreover, sometimes the competition goes so high that buying a repossessed car costs more.
Where Can You Buy Repossessed Cars?
If you are exploring how to buy repossessed cars, you must be aware of places where repo cars are sold. You can buy a repossessed car from banks, credit unions, online and offline auctions, repo companies, and used car dealerships. Here is the breakdown of all:
1. How to Buy Repossessed Cars from Banks and Credit Unions

The process for buying repossessed cars from banks and credit unions is very straightforward. You can find buying opportunities at bank websites and in local newspaper ads. Place the bid when you see an interesting listing and wait to see if it is accepted.
Buying repo cars from banks has some pros and cons as well. The good thing is that they offer financing along with the sale. The downside is that you cannot inspect the car for faults and are unable to accurately estimate its true value.
2. But Repossessed Cars at Auctions (Live and Online)

Many repossessed cars go directly to the live or online auctions. In the live auctions you attend in person, see the cars, and bid against others. On the other hand, in online auctions, you browse listings, see photos and reports, and place bids digitally.
How repo car auctions work
Here is the overview of the repossessed car auction process:
- Cars are listed for sale after repossession.
- You register for the auction.
- Bidders compete until the highest bid wins.
- Payment and paperwork are processed.
- The car title is transferred to you.
Tips for buying repossessed cars from auctions
When you decide to buy a repossessed car from auction, always set a budget and stick to it. Before setting the final budget for bidding, do some research to know the market price. Moreover, do not forget to consider extra costs like transportation fees, buyer premiums, and repairs.
3. Repo Companies for Buying Repossessed Cars
Sometimes the lender hands over the car-selling task to the repo companies. If the borrower is unable to find and implement some car repossession loopholes, the repo company repossesses the car. It handles the storage, listing, and selling process of repossessed cars.
The buying process of a car at repo companies works like a bank, such as when you submit a blind bid online. Please note that the repo company adds extra fees for storage and preparation.
4. Used car dealerships for purchasing repo cars

Finally, the fourth option is to contact car dealerships to buy repossessed cars. These cars are usually cleaned, repaired, and sold as repo cars, like regular used cars. The car dealerships offer warranties, simplify paperwork, and provide in-house financing options. The bad thing is that the price might be higher than at the auctions and repo companies.
How to Buy Repossessed Cars Step by Step
Once you have decided where to buy a repossessed car, following all steps carefully is necessary. Here is a step-by-step process of buying a repossessed vehicle:
- Research Sources: Decide if you will buy from a bank, auction, repo company, or dealership.
- Check Listings: Look for cars on online platforms like bank websites, auction platforms, and repo dealers.
- Inspect the Vehicle: Always review condition reports, photos, and vehicle history (like NMVTIS reports).
- Set a Budget: Decide the repo car prices, including the charges of repairs, transport, and fees.
- Register and Bid: Sign up for auctions or submit bids to banks/repo companies.
- Secure Financing: Some banks and dealers offer auto loans. Otherwise, consider a personal loan.
- Complete the Paperwork: After winning the bid for buying repossessed cars, complete all paperwork and transfer the title to your name.
- Pick Up the Vehicle: After making payment and transferring ownership, arrange for pickup or delivery.
Can You Get a Loan for a Repossessed Car?
Yes, you can get a loan. It depends on where and how you buy repossessed cars. The banks and car dealerships usually offer traditional auto loans. Repo companies and auction centers usually charge full price or sometimes offer personal loans. In comparison, the online auctions sometimes allow financing if you have good credit.
Pros and Cons of Buying Repossessed Cars

If you are planning to buy repossessed cars, be aware of the possible pros and cons. Like any purchase, there are advantages and risks. The pros of purchasing repo vehicles are
- Lower price than market value.
- A wide variety of cars are available.
- Fast buying process.
Whereas the cons of buying repossessed vehicles are listed below:
- Cars sold as-is (no warranty).
- Risk of hidden damage or poor maintenance.
- Extra costs (repairs, transport, fees).
- Tough competition at auctions.
Pro Tips for Success in Repo Car Buying
Here are some of my recommended pro tips for getting a repossessed car easily and at a good price:
Research Car Values: Use tools like Kelley Blue Book to know the fair price.
Inspect Condition Reports: Always check mileage, accident history, and title.
Budget for Extras: Add repair costs, transport fees, and insurance.
Stay Within Your Budget: Auctions can get competitive, so don’t overspend.
Look Beyond One Auction: Check multiple sources before deciding.
Moreover, when buying repossessed cars, there are some critical things to always keep in mind. Here are some important things to watch for:
- Some cars may have been damaged on purpose by the previous owner.
- Cars might have been sitting unused for months, which can cause mechanical problems.
- An incomplete service history is common, so you may not know the full background.
- Competition can sometimes push the final price too high.
Should You Buy a Repossessed Car?
The short answer is you can buy a repossessed car, but with caution. If you are looking for a cheap car and have done some research about repo cars, purchasing a repo car is a good decision. With the right approach, you can buy a repossessed car at a bargain price and save thousands. Do not forget to check reports, do research, decide on a reasonable budget, and calculate the repair costs.
Conclusion
Before getting ready to buy repossessed cars, do some research, find the best place to buy, and make a deal at a good price. You can get a repo car at banks, credit unions, auctions, repo companies, and car dealerships. Choosing the right place to buy, following professional tips, conducting a proper car inspection, and doing thorough research help you make a good deal.
FAQs
Is negotiating the price of a repossessed car possible?
Yes, there is always the opportunity to negotiate the price of a repossessed car. The negotiation is possible when you buy repossessed cars from banks and used car dealerships. At offline and online auctions, the final price is decided based on the final bid.
Do repossessed cars sell for cheap?
Yes, repossessed cars often sell for cheaper than regular used cars. The reason is that lenders just want to recover their money quickly, so they list vehicles at below-market prices for easy and quick selling.
How many missed payments before repo?
Most lenders begin the repossessing process after 3 missed payments, but it can vary. To get an exact estimate, completely read your contract with the lender.
How much to pay for a repossessed car?
It is ideal to pay 10–30% below the market value when buying repossessed vehicles. Moreover, always include extra costs like repairs, transport, and auction fees in your total budget.
Where do cars that get repossessed go?
Repossessed cars usually go to auctions, banks, repo companies, or dealerships. If you are planning to purchase a repo car, you can choose any one of these based on your preferences.
Why do repossessed cars go to auction?
The auction is a great way to sell the repossessed cars quickly and at a good price. That is why lenders usually send the repossessed cars to auctions.