How to Buy Back a Repossessed Vehicle at an Auction

When a person who has taken out a loan to purchase a car becomes delinquent in paying back the debt, the lender may choose to repossess the vehicle, which acts as a form of collateral on the loan. While the specific procedures for this repossession vary by state, in many cases, the lender will be required to sell the car at auction. The borrower may then attempt to repurchase the car by entering the bidding.

Buying Before the Auction

In many states, before the lender places the car up for auction, the borrower is given another chance to retain the car by paying the money he owes on the car loan. The borrower may be required to pay not just the money owed on the loan, but also the expenses incurred by the lender in seizing the car. If he fails to pay, the car will be put up for auction.

Auction Rules

The borrower generally will be informed of the auction at which his car is being placed for sale. Before going to auction, the borrower should familiarize himself with its rules. These include the requirements bidders must abide by to bid and the procedure used for bidding on items. For example, a bidder may be required to put down a deposit before he bids and must settle immediately in the event he purchases an item.

Paying For the Car

Once a bidder has won the car, he is required to furnish payment immediately for the vehicle. Depending on the rules of auction, the bidder may be required to pay immediately in cash or with a cashier's check. Generally, a car won at auction cannot be paid for in installments. This means that, depending on the price the car fetches, the borrower may have to pay more than he initially owed on the vehicle.

Additional Debts

Whether the borrower successfully repurchases the car at auction or not, he is responsible for paying any expenses the lender incurred in the course of repossessing the vehicle. He also is responsible for making up the difference between the amount outstanding on the loan and the amount the car fetched at auction. Although he may retain possession of the car, these debts are not automatically dismissed.