Where Do Cars at Government Auctions Come From?

Government auctions are very interesting. One of the biggest questions people have is where do these vehicles come from? Why is the government selling them anyway? What does a person get if they buy a vehicle from these government auctions? Are these vehicles really worth it?

Find out all the answers right here.

Where Do They Come From?

Vehicles sold at government auctions are more likely to have come from the following:

Seized Vehicles

This is actually a very interesting category of cars for auctions since they are usually related to a crime like drug trafficking or money laundering.

In the United States, defense agencies and the court have the power to seize assets from persons or business entities they believe to be engaged in an illegal activity. This process is called civil forfeiture, and it is filed against the asset (or thing).

This proceeding is very controversial and has been a subject of intense debate since the seizure can happen even out of suspicion and without any formal charges. But that is beside the point of the article.

Once these vehicles have been seized, the government may then sell them in order to recoup what it believes it might have lost due to these illegal activities. Whatever money they raise from these vehicles should go to the government’s coffers.

Surplus

The government can have surplus vehicles--in fact, a lot of them. This could be because they have purchased cars even before they have disposed of their existing one. Regardless, they have one too many, and rather than let some of the vehicles depreciate without taking advantage of their remaining market value, they prefer to sell them at auctions.

Related Institutions and Organizations

Hospitals, schools, and other organizations may also sell their assets in a government auction if these vehicles have been purchased through a government contract.

Off Lease

The government also buys the vehicles and leases them to other agencies. The one responsible for the acquisition is the General Services Administration. Once the lease is done, the agency then returns the vehicle to the government. GSA may then sell these cars at an auction so they can update their fleet for leasing.

Tips

One of the foremost reasons why dealers and individuals are getting their vehicles from government auctions is quality. It is assumed that since the government is the previous owner, the vehicle is in pristine condition and comes with a clean title. Usually, it is. That’s why you can certainly see that you’re getting your money’s worth in a government auction.

However, you should still perform due diligence. Remember, once you’ve won the bid, you may not be able to change your mind anymore and simply return the vehicle. You are therefore expected to:

• Participate in the inspection.
• Compare the car’s VIN to a database like that of Carfax or NMVTIS.
• Know the possible resale, market, and trade-in value of the vehicle.
• Test drive if you’re allowed before you officially sign the paperwork and pay for the car.