It’s often reported that buying a car from an auction can be cheaper than buying a car from a dealership. While this may be true there are other things to consider as well. There are many car auctioneers in South Africa and the banks typically have their own auction houses to sell repossessed cars off at a fair price.
First National Bank (FNB)’s Wesbank division conducts car auctions on a regular basis. Buyers can check the cars on offer on the online catalogue and set their budgets accordingly. Once cars are bought, payments can be made via electronic transfer, bank guaranteed check or through a release note from a reputable financial institution.
There are lots of things to consider when buying a car on auction. Justmoney interviews Wesbank’s head of brand and communication Rudolf Mahoney to find out more about how car auctions work and whether motorists should consider them.
- What is one of the main attractions to buying a car on auction? Is it always cheaper than a dealership?
Rudolf Mahoney (RM): There’s the obvious price benefits. There’s the trade price on the car and the retail price at which they (the dealership) will sell the car. The difference is the margin the dealer makes. A car that is sold on auction is often closer to the trade value than retail price. So the cars generally cheaper at the auctions. It does differ from model to model and make to make.
- What are the big risks to buying vehicles in auctions?
RM: You buy at your own risk. So if there is something wrong with the cars you pay for it. So you need to factor in a big margin for the ‘what if’ so that you are not left out of pocket. The auction is the only exclusion where the Consumer Protection Act (CPA) doesn’t cover the person buying the car. DEKRA inspections are also conducted on the cars that we sell ahead of the auctions so there’s extra peace of mind there. Not all auction houses do them. We also spend a lot of money fixing up some of the cars so that we can get as much as we can at the auctions. All of Wesbank’s cars are from repossessions.
- What about online car auctions? What are the dangers there?
RM: We do not have online car auctions. If you are buying a car I believe you need to inspect and feel it and touch and smell it. For us in our track record online auctions have not worked out that well. We sell repossessed cars and in a lot of the instances that person didn’t have money to pay for the car then couldn’t maintain it either. It’s better for our type of auctions for the repossessions for people to physically inspect the cars.
- When it comes to car auctions, are there any fees involved?
RM: When you come to the auction there’s a R5000 deposit that you pay to Wesbank. We do this to make sure that there are people at the auction with serious buying intent. The R5000 can go towards the car if you decide to buy it and if you don’t buy anything you get it back. You must bring FICA documents, so would need things like your ID and proof of residence. We also offer finance and a whole range of extras on the day of the auction like warranty products, and service products so that you have that risk covered.
- What should you do before the actual auction day? What are some of the best ways to prepare?
RM: We have auctions every Thursday, but you can view the cars the day before. Unfortunately you can’t test drive as there’d just be too many cars to test drive. But you can bring mechanics and start the car, so you can do a thorough check. There are no guarantees or warranties that come with the car.