If there’s one thing that sums up the free market economics of the auto industry more than anything, it’s being able to sell a car at auction. Instead of approaching a conventional dealership, hat in hand, and inevitably accepting the lowest price that they’re prepared to give you, you get to pit buyers against one another, watching the price tag leap up while you just sit back and enjoy! Here’s a brief guide to selling your car at auction.
Why choose an auction?
Using an auction to sell your car is one of the easiest ways to get a fair price on it, and motorists can often stand to earn a lot more from their sale than they would at your usual dealership. Having said that, there’s a drawback in that you have to pay the house a commission fee. This varies depending on the auction centre you choose obviously, but is usually about 5% plus VAT. We come to another big drawback in the fact that there’s a possibility of the final price being slightly lower than what you could have got in a private sale, but the reverse is often true if you can stir up a bidding war. Auctions being a good choice or not usually hinges largely on the model and age of the car.
How much will it cost me?
The commission rate for the auction will vary, naturally, on the car you’re selling. Having said that, you should generally budget between £100 and £150 as an entry fee, plus 5% (plus VAT) of the final sale price you think you can get. Let’s say you sell a car for £10,000, you will take home £9,400 (£500 plus VAT of 20%.) Obviously, depending on the circumstances, you’ll also need to think about the cost of any repairs, cleaning, covered car transport and other things necessary for getting the lot to the auction in good shape.
Do I get to set a reserve?
This is one of the most common questions asked by people who are considering selling their car at auction, but are pretty inexperienced with the whole thing. Essentially, when you first reach out to the auctioneer, they’ll usually ask for a few photographs of the vehicle, along with various details, such as the age, the service history, mileage, and overall condition. Having heard those details, they’ll then come up with an estimate as to how much they think the car will fetch at their auction. This, in turn, can be used to come up with a fair reserve price. If the bidding on your car doesn’t reach or break this price, then the car won’t be sold. However, if it gets pretty close, you’ll often be asked if you want to meet the highest bidder in the middle. This can usually get you a pretty decent deal, but you’re under no obligation to accept it if you don’t want to.
If you were curious about selling your car at auction, I hope this little post cleared up a few niggling uncertainties.
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