Repo cars: Deal or disaster? - MoneySense

Repo cars: Deal or disaster?

Buying a repossessed car can mean significant savings, but at the price of uncertainty


If you’ve driven past a RepoDepot or read about a police auction in the local paper, you might have wondered about buying a repo car. After all, these are cars that have been repossessed by a bank, leasing company, or lender when the original owner started missing payments. Surely you could get an amazing deal?

In fact, buying a repo can save you big bucks—between 25% and 40% off the cost of a similar used car. But keep in mind that you could find yourself with a big fat lemon on your hands. You might not even be able to drive it off the lot. The key is to keep in mind that when you’re buying a repo, it’s buyer beware.

The biggest problem with buying a repo is getting a handle on what shape the car is really in. When you buy a used car, you can always get a mechanic to check the car out for you, but not with repos. This is disconcerting, because the type of person who defaults on his or her car payments is not necessarily the type who makes sure that all the scheduled car maintenance is done on time.

Of course, the unknown condition of the cars is one reason why they’re so cheap. For instance a British Columbia repo bailiff (who didn’t want to be named), says he sold a motorcycle that was worth $6,000 for just $1,500 because it had a blown engine. But the buyer only had to pay another $1,000 to fix it. “Those are the sweet deals,” he says.

The other reason the cars are so cheap is because the banks and lenders just want to recover their money—they’re not looking to make a big profit. “In their mind they’re not really selling a car,” says London, Ont., bailiff Scott Ewart. “They’re selling an asset that belongs to the bank.”

There are several websites that specialize in selling repossessed cars, such as and Marvin Bowman of Burnaby, B.C.-based says his company gets about 200 repo cars a month. Many such online dealers offer reports and warranties to help defray some of the risk. For instance, provides an 88-point report outlining the vehicles deficiencies, and offers a 30-day warranty on components like the engine and transmission. You can extend that warranty up to two years for an additional $670 fee.

Another way to buy repo vehicles is through auctions. Ewart, the bailiff, bought a Ford Explorer this way himself. While you can’t get the cars checked out by a mechanic before the sale, you can kick the tires yourself. Before his auction took place Ewart wandered over to the Explorer he was interested in and started it to hear the engine sound. He also checked the oil, the transmission, the tire rod and looked under the hood. He liked what he saw, so when the SUV came on the block he started bidding. He got it for a couple of thousand dollars less than he would have paid to buy a similar SUV used.

When buying a repo, George Iny, president of the Automobile Protection Agency, suggests sticking to vehicles that are less than 18 months old. The newer the car, the fewer problems it will have. As well, there is a large supply of lease returns for three- to four-year-old vehicles that people can buy on the cheap. “Repossession is an advantage when there isn’t a large supply of similar cars on the market,” he explains.

While the deals are still out there, the repo business is getting smaller. An increasing number of car dealers are buying up repo cars, and the auction sites are starting to host dealer-only auctions. Thus, many of the best cars are snapped up by the dealers, leaving the leftovers for the general public.

You definitely can find a great deal on a repo if you know your way around a car, and you’re willing to take a chance. But you’ll probably only save a few thousand dollars. If the prospect of coming home with a lemon is enough to keep you up at night, you might want to just stick to the used car lot.