How to Buy a Car from Copart
While there are many videos and information out there on how to buy cars from Copart, this article will provide a quick overview on how the process works and we will also cover the ins and outs of purchasing from Copart.
Buying Copart Vehicles
Copart is one of the largest vehicle auction companies in North America. They are known for selling hundreds of thousands of used cars every month. In fact, there are over 2 million vehicles listed online.
Copart is open Monday to Friday from 8am - 5pm for business days. They have multiple Copart Locations and can cater to international buyers.
First, Copart is an attractive place to purchase a car, however, there are very important considerations to think about before diving in.
If it is your first time buying a used car, please note that Copart and IAA cars are considered totaled vehicles, where the cost to repair exceeds the value of the blue book value of the car.
Can I inspect Copart vehicles in person before bidding?
Copart offers inspections for those unable to inspect a vehicle in person. By inspecting the vehicle yourself, you can help make sure you do not overpay or underpay for it.
If you speak to Copart users around the nation, the number one rule is to see the car for yourself. This is true when looking at any used car.
Copart is unfortunately notorious for doctored vehicles sent back to the auction block if the previous owner realized that the final costs would exceed any potential profits from a future sale.
YouTuber, Nathan's DIY Garage, shared that Copart values are going through the roof and the quality of the cars are declining. This might be due to the crazy car prices during the pandemic and inflation.
Depending on what you are looking at, you might be able to pick up a good project for an affordable price. Anything that is desirable or rare, would have many more bidders.
However, more common cars can still be picked up fairly cheap. You just need to understand the market and supply.
Do You Need a Special Dealer License to Bid on Copart?
You don’t need a special license to purchase vehicles from Copart. In fact, it doesn’t matter what type of business you run. All businesses are eligible to bid on vehicles sold by Copart. There are certain cars that may require a dismantler license in order to purchase. Some of the cars might be for export only.
However, there are some exceptions. One thing that has recently popped up is that the public is able to bid on salvage titled cars. But for clean title cars and vehicles, you will be required to have a dealer's license or work with an auto broker to place your bids.
To determine whether you need a license, simply look up the vehicle on the auction site. Then, check the vehicle details to see if a license is required. If you need a license, you'll find information about how to apply online.
Secondly, depending on your state, you might be required for a business license and a dealers license to place a bid. In my case, I'm in New Jersey and a dealer's license is required for both clean titled cars and salvage titled cars.
Are All Cars at Copart a "Total Loss Vehicle"?
A total loss vehicle is usually defined as one where the cost of repair is more than half the original value of the vehicle by an insurance company. This includes vehicles that are beyond repair due to extensive damage caused by fire, flood, earthquake, storm, vandalism, collision, etc.
Total losses account for about 10% of all insurance claims. They tend to occur most frequently among older cars but can occur anytime the repair cost exceeds 75% of the market's retail costs.
There is a common misconception that all cars on Copart are salvage titled cars. However, they do offer clean titled cars that are limited to auto brokers or dealers. It is considered wholesale where it is essentially dealer to dealer.
If you were interested, then you would need to work with an auto dealer.
What is a Salvage Title?
A salvage title is given out if an insured automobile is declared a total loss and cannot be repaired. This title is typically used for cars that have been totaled due to severe damage such as fire, flood, earthquake, etc. The owner of the vehicle receives a salvage title if he or she does not want to repair it.
In order to drive a salvage titled vehicle legally, there must always be certain repairs made to it. These include making sure the tires are inflated properly, checking fluid levels, repairing dents, replacing missing parts, and performing routine maintenance. If you do not make these repairs, it could become illegal to operate the vehicle.
Salvage titles limit who can buy or sell vehicles. For example, if someone buys a salvage title car, they cannot resell it unless they fix up the vehicle and obtain a clean title. They cannot transfer ownership without following certain procedures.
If a salvage titled car is repaired and passes the inspection, then the title will be rebranded as REBUILT. However, some states will keep the title as Salvage in some cases.
Things to Avoid at Copart
First things first, you will need to understand how much you can risk when purchasing a car at Copart. Most users will suggest you look at the public marketplace, unless you have the time, skills and resources to put back together a car.
While I do enjoy working on cars, the main issue in my opinion is the reduced resale value a branded title will bring. Industry experts agree that it can be reduced as much as 30% or more when trying to resale.
I also cover this in an article, "Should you buy a rebuilt car?" I explain the things to consider when thinking about purchasing.
Skipping Inspection
As mentioned earlier, never skip an in-person inspection. The chances of getting burned is a high one especially withDoctored Hidden damage, that is not easily seen on the photos.
There have been reports that shops and scammers quickly tidy up the damage and send it back to the auction block if it's too expensive to fix. You don't want to be catfished by the damage unseen in the photos.
Copart Auction Fees
Another important item to consider are the auction fees. There are a number of key costs involved when purchasing from Copart.
Sale Price - This is the highest winning bid on the auction.
Buyer Fee - Depending on the final sales price, there are buyer fees associated with the purchase. The higher the sales price the higher the buyer fees. You can see a listing of buyer fees here - https://www.copart.com/memberFees/.
Virtual Bid Fee - In addition to the buyer fee, there is also a small virtual bid fee. I am assuming that these are administrative costs involved with managing the platform.
Gate Fee - When you are picking up the car, there is also a gate fee associated with the delivery. The updated price for the gate fee is $79 and it covers the cost from moving from the yard to the buyer's loading area.
Delivery Fee - On each auction, there is an estimated delivery fee listed. There are different fees depending on the location.
Sales Tax - As with any car purchase, there are sales taxes that need to be collected. This is considered a business transaction, sales tax for your state will be collected on your behalf. The sales tax is based on Sale Price, Buyer Fee, Virtual Bid Fee, Gate Fee & Delivery. You might be exempt if you have a sales tax license.
How can I cancel a bid that I won on Copart?
If you won the bid, you are on the hook for purchasing the car. You have a full 8 days to pay for the car or vehicle. However, if you DO NOT Pay for the winning bid, you will be penalized with a required payment of 10% of the winning bid or $600 whichever is higher.
Secondly, it will ruin your chance to be able to bid again as you will be flagged as a non payment bidder.
Final Thoughts on Copart
Buying a vehicle on Copart is not recommended for new car buyers or first time buyers. There is a lot of risk involved and it takes a considerable amount of time, money and resources to get a car back on the road.
I strongly suggest looking at other places like Facebook Marketplace or other online car shopping sites for roadworthy vehicles.
However, if you can wrench and have the passion to help get a specific car back on the road, it might be a good project to pursue.