Buying a Repossessed Car: Here’s What You Need to Know

by Zach Shefska | Last updated Apr 20, 2023 | Car Buying, Used Cars

Buying a repossessed car carries a lot of stigma. Why was the vehicle repossessed? Did the previous owner maintain it at all? Am I getting a great deal because it was a repo?

Savvy car buyers who are looking for great deals will inevitably find themselves researching repossessed cars. The thought of spending thousands upon thousands of dollars on sheet metal and a gas pedal is concerning for many shoppers, and buying a repossessed car can sometimes appear to be a more cost effective way to get into a used car.

Today we decided to tackle this topic and share our two cents on what you need to know about buying a repo car. As always, if you prefer to watch instead of read, simply click on the video above. Otherwise, let’s dive right in!

What is a repossessed car?

It goes without saying that life can be tough. We’ve all experienced it before. There are highs and there are lows, and unfortunately for some, the lows can entail not being able to pay their bills. When that happens, repossession is typically right around the corner. Sadly, this happens to millions of Americans each year.

Based on 2019 data, vehicles are repossessed at a rate of nearly 5,500 per day in the United States. That totals more than 2 million repossessions each year.

There are two types of repossessed car; voluntary and involuntary. As a car buyer you won’t know if the vehicle you’re purchasing was a voluntary surrender repossession, or an involuntary repossession. At the end of the day, both are repo cars, which means their former loan holder could not meet their payment obligations to the owner (the bank that gave them the loan).

Carfax reports have been known to show “repossessed” when applicable, however they aren’t 100% accurate, so knowing you are purchasing a previously repossessed car can be tough.

Should I buy a repo car?

Repossessed cars come in all sorts of different conditions. As I always like to say, “no two used cars are the same,” and repo cars are no different. The tricky thing about buying a repossessed car is that you have no clue how well the prior owner took care of the vehicle. That being said, getting your hands on the Carfax, and asking the seller (whether it be a dealer or a bank auction) to review the service history is an absolute must.

The more information you can get on the history of the vehicle the better, and without a doubt you need to get a pre-purchase inspection completed before buying any repossessed car. Just like with buying a used car at the dealership, a pre-purchase inspection will provide you with the peace of mind you need to know you are not spending thousands of dollars on a vehicle that is going to cost you thousands more to simply keep it running.

So should you buy a repo car? At the end of the day it is entirely up to you, however you need to be clear on what you are getting yourself into; a crapshoot. The best thing you can do is treat a repossessed car just like you would any other used car, and get all of the information you can about the vehicle before you sign any paperwork.

How do I know I am buying a repo car?

Sometimes Carfax reports will have an indication that a vehicle has been repossessed, however there is no title designation of “repossessed,” so you’ll never see a title that makes it clear the car was voluntarily or involuntarily repossessed. As well all know, Carfax reports are not 100% accurate, so it’s important to understand that you may never know you are buying a repossessed car, especially if you’re making your purchase at a dealership.

That being said, if you’re purchasing the vehicle directly from your local credit union or bank at a repossessed vehicle auction, then you know what you’re getting into. Websites like RepoFinder exist to help you search free repossessed car listings, however you’ll quickly find that their inventory is limited, and you’ll have better luck researching local options.

What concerns should I have buying a repo car?

Buying a repo car is very similar to buying a normal used car. You should have the same concerns you’d have if the car wasn’t repossessed. Specifically, you need to feel comfortable with the way the car drives and feels. Get a pre-purchase inspection from a trusted mechanic to confirm that the vehicle is in working condition, and that the listed price is fair and reasonable.

Buying a repossessed vehicle presents no different challenges than buying a normal used car. Some people believe that since the vehicle has been repossessed it means the prior driver did not have the means to maintain the vehicle well. There could be some efficacy to this argument, however the opposite also holds some weight: the prior driver probably used it as their daily car, and until financial hardship struck, they most likely took good care of the vehicle, because they needed it to transport them to and from work.

At the end of the day, buying a repossessed vehicle can be a way to get a used car at a slightly cheaper price, however your concerns should still be the same as if you were going directly to the dealer and purchasing a certified pre-owned car.

Will I get a deal if I buy a repossessed car?

Typically repossessed vehicles are auctioned off in an attempt to return the greatest amount of capital to the financial institution that issued the loan. That being said, if you buy a repo car from an auction you’ll be paying the highest price, however that “high bid” at an auction is still most likely going to be less than what it would cost to buy a very similar vehicle directly from a dealer.