With thousands of repossessed vehicles landing up on auction floors, buying one at an auction is certainly a means of getting a car at a bargain price. But it is not without its risks.
While you can inspect the car before an auction and check out all its paperwork, you can’t drive it or send it off for a professional check.
Plus, Consumer Protection Act (CPA) regulations allow for it to be sold with “no duty to repair”, so if the car is out of warranty, or you discover it has a problem that’s not covered by the warranty, the bargain buy could end up costing you plenty.
And be aware that while an auction may be advertised, in big letters, as a “bank repo” auction, there’s a chance that the car you’re interested in wasn’t repossessed or part of a liquidated estate - it could have come from a dealer.
KNOW HOW TO CHECK A CAR’S HISTORY
But if you don’t know what to look for in these adverts, or how to check on a car’s history, you could unwittingly end up bidding on a car which came from a dealer.
Given the pitfalls of buying a second-hand car, a car repossessed from a person who couldn’t keep up with the repayments clearly has more appeal to a potential buyer than one that came from a dealer, even though you can’t test-drive the car before purchase.
Take the case of Mario Baldi of Durban.
He saw a Sunday newspaper advert for an auction at Ian Wyles Auctioneers the next day - Monday, January 23.
The biggest words in the advert were: “Bank Repossession Auction – large selection of late model motor cars, SUVs, LDVs, taxis, motorcycles etc.”
Then, in smaller letters, “Insolvent Estate”, and the name of that estate; and “Estate Late”, and the name of the estate.
“DULY INSTRUCTED”
The CPA regulations, many of which are devoted to the staging of auctions, stipulate that a sale in execution or an insolvency sale, or a sale from a deceased estate, may not be advertised as such unless at least 75 percent of the goods on sale in that auction are actually from those sources.
If it is the case that 100 percent of the goods are not bank “repos”, or whatever the large print of the advert states, the regulations compel the auction house to use the words “with additions” or “supplemented” in the advert.
In that Ian Wyles auction advert, the following words appeared in small print: “Duly instructed by the financial institutions, we will supplement and sell…” and then came the list of about 50 vehicles.
How many consumers would have understood the meaning of the word “supplement” in that sentence - had they read it at all, given the font size?
It was certainly lost on Baldi.
NO SERVICE BOOK OR SPARE KEY
He said he went to view a black 2006 Toyota Sprinter on the Sunday and liked what he saw. He returned to attend the auction on the Monday.
He insists that he made sure to check that it was indeed a bank repossession. He claims that the manager checked and then told him it was “a liquidation”, which is not the same thing, but Baldi was still interested.
He went on to bid for the car, and was successful, paying a total of R85 089 for it.
When he later called the auctioneers to ask for contact details of the previous owner, as he wanted the service book and spare key, he says he was given the name of a dealer.
Surprised, he called the dealer, who, Baldi says, claimed not to know what Baldi was talking about.
The auctioneers later confirmed to him that there was no service book or spare key for the car.
Concerned about this revelation, and the fact that the car “felt strange” when cornering, Baldi took it to a specialist tyre outlet, and was told that the right back wheel had been badly damaged in an accident and that it needed a new axle at a cost of about R10 000.
When he was unable to contact auctioneer Ian Wyles to discuss the matter, Baldi contacted me.
What he wanted was his car repaired and returned to him with a COR - or his money back, as he would not have bid for the car had he known that it came from a dealer.
CONFLICTING INFORMATION
Responding, Wyles said his company complied with the CPA regulations pertaining to auctions, and that the onus was on prospective buyers to do their homework on a car they were interested in before auction day.
More than 95 percent of the vehicles on the auction in question were what he termed “bank, insolvencies and liquidation matters”, he said.
On the windscreen of the car, he said, was a sheet of paper with details of the car, including the words: Seller: and the name of a company - OZM JY Investments.
Baldi acknowledges seeing that, but did not realise that that meant the car came from a dealer, especially given the manager’s allegedly conflicting information.
When I contacted the dealer who trades as “OZM JY Investments”, he told me that when he got cars with high mileages he “dumped” them on an auction yard.
But this story ended well for Baldi.
Wyles said that the dealer had agreed to refund the purchase price, “as he admitted in the submission of the vehicle he did not disclose all relevant facts”.
Good call.
So Baldi got his R85 000 back.
WHAT YOU MUST KNOW
According to Wyles, many cars on sale at auctions don’t have service books or manuals.
“Viewing day” offers the interested buyer the opportunity to do their “homework” on the motor vehicle before auction day, so ask specific questions about the car you’re interested in, and if you’re told it’s a liquidation, ask to see the court documents backing this up.
In the case of a bank repossession, ask to see the vehicle’s logbook. If it has indeed been repossessed by the bank, the bank will be listed on the document as both the titleholder and the owner.
If you see the words “with additions” or “supplemented” or “supplement” in an auction advert for a repossession or liquidation or sale in execution auction, know that the car or piece of furniture you’re interested in may be from some other source.
And know that the staff in auction houses do not drive the cars, so can’t vouch for their condition.
If a car you’re interested in has no service book, get its details, approach a dealership connected to that brand and ask them to check out its service history on their system. - Cape Times