Buying a Car from a Dealer who Bought from an Auction

December 3, 2019Car Tips and Tricks
Hannah Michaelson

Hannah is a freelance relocation writer from NYC that has become an expert on packing and unpacking.

You’re not the first person considering buying a car from a dealer who bought from an auction before, nor will you be the last. No matter why you’ve come to this decision, right now, you’ll want to find out as much as you can about this type of trade, as well as auctions themselves. As you have probably heard before, this can be quite an affordable endeavor, but a risky one as well. We’ve gathered all the important info that you might need. So, hopefully, you will keep the following tips in mind before you make any important decisions.

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Advice and Recommendation for All Car Shoppers

Even if you have plenty of experience with purchasing used cars, dealing with a car trader can be a very daunting task. And if you’re purchasing a car for the first time, you’ll be even more overwhelmed by everything. But there’s no need to worry about it just yet, as you can learn the basics of the car buying business. Here’s what you’ll have to consider the next time you find yourself looking to buy a car that was initially bought in an auction.

There are many window stickers you’ll have to pay attention to, especially when it comes to the price of the vehicle. Don’t be afraid to ask any questions and find out more about anything you may be interested in, particularly if it seems sketchy. Two important stickers to keep in mind are “MDA” and “ADM.” ADM stands for Adjusted Dealer Markup and could be anything from a reasonable price adjustment to a complete rip-off, so be sure to look into it. MDA stands for Market Value Adjustment and is another way to sell the vehicle for a somewhat larger price without any sound reason.

No matter what kind of vehicle you’re looking for, the mechanical condition should be at the top of your priorities. So, look for any glaring issues, like broken tail lights, worn-out tires, or any other obvious problems. If there are any glaring problems which haven’t been fixed, then who knows what’s going on beneath the hood.

Before you make any important decisions, consider a pre-purchase inspection, and if possible, include an under-car inspection as well. Usually, these consist of looking under the hood and doing charging systems and performance analyses. An under-car inspection includes checking the chassis, suspension, steering and the condition of the brakes.

person inspecting the vehicle
Make sure your vehicle is fully inspected before they hand you the keys

Watch out for Important Details, Like Who Are the Sellers

Before you even consider purchasing a used car, do your research on who are the sellers. Sometimes it could be independent car dealers, who have years of experience in the business who will know everything there is to know about selling a car. Other times, it will be a financial institution, like a bank, which is not in the car selling a business. They will mostly want to sell the vehicle for a reasonable price in a reasonable time frame.

Buying a Car From a Dealer Who Bought from an Auction, Trade-Ins, or Salvage

Here’s what you’ll need to know about how car dealers get their used cars and how you can best handle the negotiation process when buying a car from one. We will also discuss one of the most important things to be careful about when arranging such trade and that’s salvage and salvaged vehicles.

Understanding the basics of how the auctions themselves work is essential before you get to the purchase part – you want to know how the dealer got it in the first place, right? Different lights are used to represent the condition and state of the automobile in question. The red “as is” light means that the person who auctioned has won the car, in whatever state it may be. The blue light means that a title is not present at the specific time of the sale. The yellow light indicates that an announcement regarding the car will be made. This could be a small issue with the title itself, any frame damage, or anything regarding the car’s salvage history. A green light means minimal to no damage to the automobile. Depending on some specific rules, the car can be taken for a test drive around for a couple of hours after the purchase.

Another important auction rule is to arrive early, register, and ask around about any cash deposits or buyer’s fees that need to be paid. For those who arrive a couple of hours early, there’s a chance to drive around a car to test it. It might be a good idea to ask dealers about these steps to see if they put enough effort into investigating the car in question before purchasing it.

If you run into any issues after the sale, you’ll have some options depending on the level of the problem. You may be able to go through the arbitration process if anything major, like the engine itself, is not working properly. However, there’s little you’ll be able to do if the air-conditioning isn’t working in a used car like it was when the car was new.

There are a couple of different places where you can buy and sell a used automobile. These can range from various auctions, trade-ins, and the least advisable option which is getting a salvage car. So, depending on your budget, consider what would be the most suitable option for you. Do keep in mind that you may have to have your new car shipped or towed, for example, if you’ve bought it in another state.

Ways You can Buy And Sell Used Cars

Informal trade

This the best choice for people working with a low budget. The cars there are sold at a low price, but with an experienced eye, one can get the best deal possible. It is crucial to consider the car’s service history and its current condition to make sure that the price is not too high. Though opting for this one can be risky, it can also prove to be a very affordable solution.

Formal trade

Efficient auctions ran by professionals are called formal for a reason. Cars here are sold by companies, manufacturers and car dealers. Understandably so, the prices will be much higher than what you can expect at informal auctions. But the quality will be far better as well, as many cars sold here won’t be as old as the ones you can find in other places.

Closed and open auctions

The former are often secluded as the name implies, and welcome only designated traders who are working with specific manufacturers. The cars sold here are usually high quality and well-maintained. The latter are places where you can find a wide range of quality when it comes to used automobiles. These are where most car dealers can bid and buy various types of cars.


Trade-ins are another way that people obtain new cars for sale. They will often buy any trade-in possible, as there are many ways for them to work on them and try to sell them at open auctions. If you’re dealing with this, then this is the time to remember salvaged cars, which you should avoid if possible. Ask the car dealer for the vehicle’s history, and don’t forget to get it inspected by a mechanic before making the purchase.

Queue up to Talk to an Agent If You Have Any Questions Related to Buying a Car from a Dealer

Don’t forget that you don’t have to go through the entire process on your own. You can find professional help from a car purchasing consultant or agent. They can help you with all the necessary paperwork, negotiation, and bargaining. Having an experienced professional by your side could make a big difference when purchasing a car from someone who bought it from an auction.

In case you need your automobile transported somewhere across the country, you can hire a professional company for the job. There are many reasons why hiring professionals is almost always the best advice when purchasing a new car. Whether you want an open or enclosed trailer or your car shipped across the US, it’s the safest way to go about it.

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