3 Tips to Remember When Purchasing a Car From a Government Auction

Anyone shopping for a used car knows that prices have soared over the last few years, making it difficult to find a good deal. Scouring dealer lots and online ads can leave consumers weary and frustrated. However, there is an alternative that many used car shoppers are unaware of, and that is purchasing a car from a government auction.

Throughout the country, government agencies sell vehicles and other assets at reduced prices for several reasons. For example, law enforcement agencies sell seized or forfeited property obtained from criminal activity. The U.S. Treasury Department sells confiscated assets from individuals that failed to pay income taxes. Other state and federal government agencies often sell items, such as vehicles, that they no longer need.

While you may be able to find a good deal on the car of your dreams, here are three tips to remember when considering purchasing a vehicle from a government auction.

1. The highest bidder wins at an auction

A Pebble Beach classic car show and auction from Gooding and Company
A Pebble Beach car auction | David Paul Morris/Bloomberg via Getty Images

Auctions are becoming more popular as people search for a reasonably priced auto, SUV, truck, or even RV. Some buyers are hoping to find something that won’t break the bank or are looking to resell their car for profit, while many are merely dealers trying to fill their lots with low-priced vehicles.

The main takeaway is understanding that you will not be the only person bidding on a car, so do your homework before placing a bid. According to the website USA.gov, “the general rule for auctions is that the highest bidder wins, and cancellation is not possible.”

Before making an offer, check the rules on an auction website to determine the ramifications of canceling a bid. Each website will have different regulations governing the auction process.

2. Know who you are dealing with

Sometimes the government agency runs the auction and maintains a shopping site. In other instances, an outside third-party vendor handles the transactions.

General Services Administration (GSA) is a Federal Agency that manages the sale of government property at an auction. They are a non-profit entity, and most of the proceeds (beyond the cost of the sale) obtained from an auction sale get returned to the Treasury and other Federal Agencies. According to the GSA Auctions website, “The US Federal Government owns and disposes of more property than any other entity in the world.” 

You should always know what entity is handling the auction proceedings and understand their process before placing a bid. Review a detailed description of the vehicle you are considering and request a copy of the bidding instructions from the auctioneer. You can also check official websites to determine if there is a time to inspect the vehicle before the auction closes.

3. Determine the accepted forms of payment

The payment requirements are different for each entity, so familiarize yourself with accepted forms of payment before placing a bid.

All auctions are different. Some accept personal checks, cash, or credit card payments, while others are more limited in what they allow as a final form of payment. For example, the Internal Revenue Service (IRS) only accepts a cashier’s check and will not accept credit card payments or personal checks. GSA Auctions allows credit cards and domestic or international wire transfers.

It’s essential to clarify the payment options to ensure you have the funds available to quickly complete a transaction if you are the winning bidder.

Government auctions are a unique way to find a bargain on a reliable used vehicle. Competition is often fierce due to government employees and experienced brokers knowing the inner workings of the auction process. That’s not to say you don’t have a chance. Most government auction websites list the vehicle’s mileage, overall condition, and maintenance history to help you determine if the car is right for you. Follow the above-listed tips, and you might find yourself behind the wheel of an affordable used car with enough money left in your pocket to pay for gas.

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