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A car auction can be one of the best routes to picking up a bargain motor. But there may be hidden costs!

If you don't know what areas to check out in a car, then buying at auction could prove a risky investment. It is advisable to attend as a spectator first, to get an idea of how the process works.

If you don't know much about cars, then take someone with you who does. Decide the maximum amount of money you can afford and stick to it. When examining any vehicle the entry form attached to the windscreen will give you an idea of the car's history.

Auctions are probably the riskiest way of buying a used car since your legal rights may not apply if the seller issues a disclaimer. A disclaimer could include terms such as 'sold as seen', which excludes all or some of the rights the consumer has. It is therefore important to read the auctioneer's conditions of business carefully.

Safety

Always check a car for safety - being neglectful could have serious consequences, long-term. If a car has been in an accident, it may be unsafe. Sometimes, two damaged cars are welded together to create a new one. These are known as 'cut and shuts', and are almost always a risk.

There are companies that can tell you if a car is an insurance company write-off: there is a charge for this service. If you discover a car is unsafe, it is possible to sue the seller for your losses, but this might be difficult, if you bought privately, and the seller has disappeared. If you bought the car on credit, you may still have to pay off the loan. It depends on the type of agreement you have.

Stolen Vehicles

If you unknowingly buy a stolen car, then the police have the right to take the vehicle back, or return it to an insurance company. You will receive no money back, even though you bought the car in good faith.

It can often prove to be difficult to tell if a car is stolen since its identity may have been changed. For example, the identity number and number plate of a legitimate car may be transferred to a stolen one. In this case vehicle registration documents can be forged or obtained by fraud.

There are telltale signs to look for. Ask to see the vehicle registration document (V5). If the seller can't produce this document, be suspicious. A common excuse is that it has been sent to the Driver and Vehicle Licensing Agency (DVLA) for updating.

This may be true if, for example, the seller has changed address recently. But be wary. It means you cannot check the car's ownership and identity details. The seller should have a green slip if the car was bought recently, and the V5 is with the DVLA for the change of ownership to be recorded. This applies only to cars that have been issued with new V5s, introduced in March, 1997.

Check for any spelling mistakes or alterations to the V5. If there are any it may be a forgery. All legitimate V5s have watermarks. Ask for proof of identity and address such as a driving licence, passport, recent gas or electricity bill. Check that the same name and address is given on the V5.

To prevent buying a stolen car there are three main identifying features to watch out for:

1: The vehicle registration mark (the number plate).

2: The vehicle identification number (VIN) - this can be found on a metal VIN plate, usually in the engine compartment, and stamped into the bodywork under the bonnet and the driver's seat. As a security measure some cars have the VIN etched on their windows or lamps.

3: The engine number. These are shown on the V5. The numbers on the car should be the same as those on the V5.

Have you checked if the identification numbers been tampered with? The engine and VIN numbers may have been interfered with or the areas of glass may have been scratched off the windows. Another clue is if the seller can produce an insurance policy. If it is stolen, probably not. When buying from an auction always check the criteria against this list to help spot the signs of a stolen car.

Outstanding Payments

The other problems with auctions are that some vehicles being sold may still have outstanding finance. If you buy such a car and there is outstanding finance on it, the lender can take it back. You can sue whoever sold you the car - providing you can find them.

However, there are some limited exceptions to this. If unaware the car was subject to an outstanding credit agreement and it was bought in good faith, you may be allowed to keep it. This does not apply to stolen cars or cars that are subject to a hire agreement: it is advisable to get professional advice on this. Check with one of the companies that keep databases of information about cars - they can tell you if the one you want is clear of debt. If buying from a dealer, ask whether this check has already been carried out.

Mileage Alteration

Low mileage can be a major selling point. But always remember that the clock can be turned back on a car to reduce the number of miles. If the mileage is low but wear and tear on the car looks heavy, the car could have been clocked (tampered with). Clockers sometimes change pedal rubbers, steering wheels and gear knobs to hide this.

Another sign of tampering is that the mile meter numbers don't line up correctly. Therefore try to find out about the history of the car. MoT certificates and service documentation will show mileage readings taken by mechanics. You may be able to get information from the companies specifically designed to research such details.

Some dealers use trade-only database companies such as IMVA and VMC to check mileage. Ask if this is the case. The mileage reading forms part of the description of the car. Sellers sometimes protect themselves by covering up the mile meter or issuing a disclaimer saying that the mileage may be wrong.

To be valid, such a disclaimer must be at least as noticeable as the mileage reading and as effectively brought to your attention. It may be worth contacting previous owners named on the V5 to ask what the mileage was when they sold the car. You could also ask what it was used for, for example, short trips or regular motorway driving.

Look Before You Leap

Vigilance is the key when buying at auction: be careful about suspicious cars that are in good condition but relatively cheap. If you are careful and check the common dodges, then a car auction can prove the place to pick up a cheap and reliable deal

More information available in Finance, New & Used