29 August 2022 Concept Car
Looking for an attractive car deal? Repossessed cars seem like a great choice. They are cheap, quite often still fairly young and potentially in great shape. What’s not to like?
Quite a lot, actually. While repossessed cars can indeed save you a lot of money on the initial purchasing price of a vehicle, they are more often than not anything but ideal.
We don’t want to sound overly dramatic. But one thing’s for sure: If you want to go for a repo car, you need to be well-informed. In this special, we sum up everything you need to know about the topic: from how repossession works to what you should pay attention to. Finally, we’ll talk about alternatives and what to do if you have personally been hit by a repossession.
Ready to turn into a repo expert? Let’s get to it.
When you sign your loan contract with a car finance company, you agree to pay off a clearly defined sum every month for a certain period of time. At the end of that term, the loan is paid off along with any outstanding payments required. In some cases, that means the vehicle is now yours (hire purchase). In other cases, it means you must now move on to a new contract (personal contract purchase).
Either way, the lender – which will typically be your dealer or a finance company – expects you to make all payments fully and promptly. If you fail to make these payments or if you only pay parts of the agreed-upon sum, you have fallen behind on your commitments.
Should this happen repeatedly, the lender may no longer trust you to repay the loan. If this is the case, they may decide to terminate the contract and take the car back.
This process is referred to as repossession.
You might think that car repossessions occur only under extreme circumstances. Sure, car payments can be pretty high, but you’d assume that dealers try to keep loan payments to a realistic level.
In reality, they are pretty common. US statistics suggest that for every new car that’s sold, one car is repossessed. That’s bad news for sure.
A variety of factors contribute to the repo dilemma:
Let’s now turn the tables for a moment and imagine that you’re looking to buy a repossessed car. Is this a good idea?
The answer is not clear-cut. Certainly, as we’ve already pointed out, there are risks to this. Just to give you an idea, most people faced with repossession are not in a happy state of mind. Some of them react with depression, others with aggression. As a result, many drivers vandalise their repossessed cars before the repo agents can lay their hands on them.
On the other hand, the days of extraordinary deals are long over. If you plan on getting a repo car almost for free, think again. There is a reserve price for every item on an auction (including online auctions). If the highest bid does not exceed this, the car won’t be sold. More often than not, the reserve price is pretty high. If you add the auction costs to it, it may simply not be worth it.
That said, you can still find some pretty sweet repo deals. Just make sure to consider our points of notice.
Of course, every repo car still has outstanding payments on the finance contract. What you need to be absolutely sure about is that you won’t be responsible for paying it off.
To be on the safe side, you should opt for a car history check with one of the many UK service providers in this field. These usually cost between £10 to £30. Don’t hesitate to invest, as it could save you a lot in the future.
This is almost too obvious to even deserve a mention, but we’ll address it anyway. If someone can’t afford to pay the loan instalments for their car, they usually won’t be able to provide proper maintenance either.
This means that many repo cars are not in a great state. They need not be total wrecks, either. In fact, since many repossessed models tend to be quite young, they may outwardly look excellent, with only minor cosmetic issues.
Just be sure to thoroughly check what’s underneath the bonnet, if you do get the opportunity. Since this may not always be possible, you need to be aware that you could end up with a lemon.
There are, thankfully, a few things you can do to improve your chances of that not happening. One of them is going for that vehicle history check we already mentioned.
Make sure this check includes a seamless maintenance history, including the MOTs. These will give you valuable insights into the condition of the car and potential issues.
Carbuyer recommends:
“If you’re looking at an ex-repossession that’s for sale, don’t even consider buying unless its maintenance history can be confirmed as sufficient.”
This suggestion is certainly up for debate. For one, cars last a very long time these days. 200,000 miles are by no means uncommon. And if you treat your vehicle well, you can easily expect it to last for 15-20 years or more.
Secondly, not all repo cars are total disasters. You really can find great deals and not all of them have to be as good as new.
The main issue with a repo car is the risk you’re taking when buying one. This is mainly because you usually won’t be able to have it tested as thoroughly as you could with a regular used car. Auction sites will typically not allow this, which means you’ll have to buy as seen.
Especially if your budget is very small, this is a dangerous strategy. Just imagine buying a car and then still having to perform expensive repairs before you can even think about driving it!
Whether you’re a trade buyer or looking for a car fit for personal use, repossessed vehicles can be great. But if you want to minimise your risk, you should trade in potential financial gain in favour of more security.
There are a few ways of doing this. One thing is to avoid buying directly from the lender. Yes, you can get excellent prices this way, and in some cases, you can even get the financing required to buy the car in the first place.
But lenders like banks or credit unions have very little love for cars. They won’t repair them or try to clean them up. These cars accordingly look pretty run down and may require an overhaul. As with an auction, it’s very unlikely you’ll be able to test or inspect the car before committing to the purchase.
Instead, think about a repo reseller service. These, as Autotrader explains, “move the inventory from lender to buyer, without taking ownership” and often “keep up a standard for the condition of the cars.”
Of course, you can also buy repo cars from dealers. After all, many dealers use auctions to snap up lucrative car deals and will also lay their hands on repo cars.
In both cases, you will have to crunch some numbers to determine if things are still worth it. The safer the deal, the more expensive it gets. And, in some cases, you may end up paying more than you should for your car.
The great thing is that you may not need to take all this risk on board. After all, there are plenty of alternatives to repo cars, some of which can offer you great deals as well:
These options are often as attractive as a repo car but come without the latter’s disadvantages and risks. This is why we generally recommend against buying one and opting for a safer bet instead.
If you are adamant about going repo, then you should now at least have everything you need to know to make the best possible decision.
Quality finance companies are hard to come by. Most just want some cash in the bank.
But, Concept Car Credit puts the customer first and takes pride in providing quality vehicles for as many people as possible – regardless of their credit score.
All our vehicles are thoroughly checked, with a complete and up-to-date MOT – there will be no money lost investing in repairs when you shop with us.
Get in touch or apply online to meet with our experts and learn more about our used car finance plans.
29 August 2022 Concept Car
