Getting a great deal on an automobile purchase is nearly impossible, but there are places to turn for good buys and even better cars. One such place is a repo auction. But, many people don't quite understand what repo auctions are and they don't seem to realize what hidden treasures can be found at them.

Let's look at some of the top questions and answers surrounding repo auctions:

What is a repo auction?

A repo auction is one that's held on behalf of banks and other lenders to help liquidate merchandise that's been defaulted back into the bank's ownership. Everything from houses and cars to boats and trucks can be had at repo auctions. In the automotive market, a repo auction can be a very good place to get a good deal on a vehicle that's newer and generally in pretty good shape.

Why do banks take part in repo auctions?

Banks that write car loans or mortgages don't want to own a fleet of vehicles or a neighborhood of homes. They want the interest earned on the loan, not the merchandise. To help them recover the financial loss experienced in a default, they often host auctions to recoup their money. This doesn't mean the bank will necessarily let a car go for thousands and thousands less than its value, but since it really is only interested in covering its loss, savings likely will be realized. Sometimes the savings can be great.

What kind of cars can be found at repo auctions?

Just about any type of car, truck or van that a bank will write a loan for can be found at a repo auction. Typically these are newer model vehicles that are worth the "risk" to the bank.

What is the condition of vehicles at these auctions?

That will vary from vehicle to vehicle quite honestly. Most vehicles are in very good shape, but that doesn't mean all of them are. It's important to ask questions about items you might bid on. Don't take it for granted the car is in perfect working order.

Are their warranties on purchases from auctions?

Sometimes. Generally, the banks themselves auction the cars off "as is," but it's possible manufacturer warranties will extend to the purchase. It will all depend on the banks, the cars in question and who made them.

What kind of deals can be had?

Again that will depend on the car in question and the loan that was outstanding on it, but generally you can pick up newer cars for a fraction of the sticker price by going to auction. Of course, you have to place the winning bid to do so.

How do you find these auctions?

They are generally listed in newspapers, magazines, on television and there are even special computer programs that know exactly where to look to find upcoming auctions. Some of these programs can sort auctions by those that have particular cars, too.

A repo auction is a different way to buy a car, but the truth is it can be a great way to do so. There's no reason to pay full price, but it is a good idea to exercise judgment and look carefully before bidding.