Repossessed cars are pre-owned vehicles seized or re-acquired by banks when the owner is no longer capable of paying his car loan debt. Lenders usually repossess cars if no payments were made in the last 60-90 days.
It’s similar to foreclosed properties when banks seize the real estate property when the borrower fails to pay his housing loan obligation.
These cars are considered “bad debts” from a bank’s perspective. That means they’re part of the bank’s losses. They want to get rid of these units and convert them to cash at the soonest possible. To make that happen, banks offer competitive prices that’s really attractive for car buyers.
Why You Should Consider Buying Repossessed Cars
Repossessed cars are significantly cheaper than brand new cars. It’s attractive for car buyers since you can save around 20-30%, depending on the year model and mileage.
If you’re considering buying a car but don’t have a budget for a brand new vehicle, repossessed cars could be your option.
Some investors also consider repossessed cars as they could repair, remodel and sell them for a profit.
There are a few things to consider when buying repossessed cars.
Tip #1 Research the market value of the vehicle
Repossessed cars are sold thru bidding. It has its minimum selling price, and whoever bids the highest will take home the vehicle. It’s wise to thoroughly research the car before you make a bid, as this could make or break the deal. You don’t want to overpay a car on its current value.
Tip #2 Bring a mechanic during the actual inspection
Remember that repossessed cars will be sold on “as is where is” basis. It means you’re buying a car in its current condition, whatever that condition happens to be. The bank does not guarantee the condition of the units.
Also, some banks may not let you open or test drive the unit so bringing a trusted mechanic with you is your best bet. Seasoned mechanics can easily spot problems thru visual inspection that regular people couldn’t normally see.
Tip #3 Check the car’s LTO/LTFRB/PNP/HPG records
Go the extra mile of checking the LTO records of the car for outstanding notices or alarms. Also, check with LTFRB if there’s an outstanding franchise(s) attached to the unit. Finally, check with PNP or HPG if there are camp notices/bulletins on the unit and if the body numbers match with the records.
You don’t want any of these unwanted surprises later on.
Tip #4 Ask if car financing is available
Instead of paying the repossessed car in cash, some banks offer financing options so you can pay it via installment. This is way better than paying in full amount, so ask the account officer or sales specialist.
Buying repossessed cars is simple with these few steps. The detail could vary from bank to bank, but the general process is similar.
Step 1: Select bank
Check out the updated list of banks’ repossessed cars below.
Step 2: Choose your car
Visit the bank’s repossessed cars page. Browse and select the car of your choice. You can find the year model, mileage, color, fuel type, minimum bid price and warehouse location for each car
Step 3: Inspect the car in person
Once you find the car of your choice, you can visit the bank’s warehouse/showroom to see and inspect the car in person. You don’t want to buy a car by just looking at a picture
Step 4: Make an offer
Bid on your car of choice by submitting an offer
Step 5: Make a payment
If your bid is accepted, you are given 2 days to pay the amount in cash. If an auto loan is available, you must pay the reservation deposit and submit the requirements within 2 days.
Step 6: Drive your car
Congrats! Now you have your wheels ready!
In buying a car, it doesn’t need to be a brand new car. In fact, if I were to buy my first car I would seriously consider a pre-owned car. I could certainly ask a few friends to refer a trusted mechanic. As long as I’m confident about the condition of the car, I could save a huge amount of money.
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