Buying a vehicle on auction: the checks, the costs and the paperwork

Where auction vehicles come from

Vehicles reach auction because somebody has to sell them. The reason shapes what the seller knows and what paperwork comes with it.

Dynamic Auctioneers does not hold bank repossession contracts; those go through a small number of high-volume auction houses. Our vehicle auctions page covers what we do sell, and the distressed vehicle auctions page explains the difference.

Before we market a vehicle, the seller signs a mandate confirming the right to sell it, and we verify ownership through the registration and eNatis records. That is a check on the seller’s right to sell, not a guarantee of title: the registration record is not proof of ownership, so the checks below still matter. Nor does it tell you anything about condition, which is what the rest of this guide is for.

Read the paperwork before the viewing

Read the lot description for make, model, year and, where it is given, the odometer reading. Look in it for whether the vehicle runs, whether there are keys and papers, and whether it is sold subject to VAT.

The conditions of sale set the deposit and commission, the period for the balance, when risk passes to you and the collection deadline. They differ between auctions, so read the set for the one you are bidding in. Our rules of auction page explains the framework.

The notice on the vehicle

The Consumer Protection Act regulations require a notice on every motor vehicle at an auction, for the whole time it is open for inspection (regulation 32). Among other things it must give:

• the auctioneer’s name and business address;
• whether there is a duty to repair the vehicle and who carries it;
• the year of manufacture (if known) and the year of first registration;
• the make, model, registration number, engine number and VIN;
• whether the odometer reading is guaranteed.

Copy the VIN and engine number down. If the odometer is not guaranteed, price the vehicle as though the mileage could be wrong.

What to check at the viewing

Test drives are generally not permitted. You can inspect at the published viewing and in many cases start the vehicle, so this is where you find the problems. Everything is sold voetstoots. Bring a torch, and a mechanic if the price justifies one.

Body and chassis

• Uneven panel gaps, mismatched paint and overspray on rubbers: accident repairs.
• Rust in the sills, floors and chassis rails.
• Silt, water marks, a damp smell or corrosion where it should be dry: flood damage.
• Tyres: matching brands, even wear and age.

Engine, cabin and running gear

• Start it from cold if you may. Listen for knocks, watch for smoke and note which warning lights stay on.
• A milky residue under the oil filler cap can mean coolant in the oil. Look underneath for leaks.
• Wear on the steering wheel, pedals and driver’s seat should fit the mileage.
• Service book, spare key, spare wheel, jack and locking wheel nut key: each missing item costs money.
• The licence disc: its expiry date tells you whether arrear licence fees are likely.

For trucks, check the odometer against the maintenance records. Goods vehicles over 3,500 kg gross vehicle mass, buses, breakdown vehicles, minibuses over 3,500 kg or seating 12 or more including the driver, and vehicles carrying people for reward need a roadworthy certificate that lapses with the licence disc, or after six months for a bus (regulation 142 and regulation 145), so ask when the last one was issued. For earthmoving and other plant, see the plant and machinery auctions guide.

Matching the VIN and engine number

This check matters most: a vehicle whose numbers do not match its papers may not be registrable in your name at all.

Every motor vehicle must carry a chassis number of up to 17 characters and, if it has an engine, an engine number, each cut, stamped, embossed or permanently fixed to it (regulation 56(1) of the National Road Traffic Regulations). On cars, minibuses, buses and goods vehicles first registered from 1 January 1996, the chassis number must follow the international 17-character VIN format (regulation 56(2)). Look for it on a plate or label and stamped into the body or chassis; the engine number is on the engine.

1. Read the numbers on the vehicle itself, not only from a label.
2. Compare them with the registration certificate and the notice on the vehicle. Every character must match.
3. Look at how they are marked. Uneven characters, grinding marks, fresh paint or welding around the stamping, or a plate held on with non-original rivets are warning signs.
4. Run a paid vehicle history check on the VIN for finance, accident, write-off and theft records.

If a number is missing, altered or appears on another vehicle, the title holder must take the vehicle to the South African Police Service for new numbers and a clearance before a new registration certificate is issued (regulation 56(3) to (8)). Section 68(6) of the National Road Traffic Act also makes it an offence to possess, without lawful cause, a vehicle whose engine or chassis number has been tampered with. If the numbers do not match or look interfered with, do not bid, and tell us.

Finance on the vehicle and settlement letters

Vehicle finance is commonly an instalment agreement, under which ownership usually passes only when the account is paid. Until then the finance house is normally recorded as the title holder: in the National Road Traffic Act’s words, the person who has to give permission for the alienation of the vehicle (its sale or other disposal) under its agreement with the owner.

So ask to see the registration certificate before you bid. If a bank or finance house is the title holder, the vehicle transfers cleanly only once that account is settled and the title released.

Where a vehicle is sold out of an estate or liquidation, outstanding finance is dealt with as part of that process. In an insolvent estate, section 84 of the Insolvency Act treats a vehicle bought on an instalment agreement as security for what is still owed, so the finance house ranks as a secured creditor over it. It can also require the trustee to hand the vehicle over, so a financed vehicle may be realised through the finance house rather than at the trustee’s auction (see insolvent estate and liquidation auctions).

What a settlement letter is

The finance house’s written statement of the amount needed to close the account, valid until a stated date. Once it is paid, the title holder completes its part of the notification of change of ownership and hands over the registration certificate, or records the change electronically on eNatis (regulation 53(3) and (7)). Ask how the finance on a lot will be settled and who obtains the release. If nobody can tell you, do not bid.

Your own finance

Arrange it before you bid: the balance is due within the period in the conditions of sale, usually too short to start an application from scratch. Unless the conditions make the sale subject to finance, a declined application does not undo it.

Costs on top of the hammer price

Commission is set per auction, so we publish no house rate; the buyer’s premium guide explains it. With VAT at 15% (since 1 April 2018; SARS: VAT), a rate quoted plus VAT costs 1.15 times that percentage.

Arrears and late registration

Register late and the province adds a penalty of one tenth of the fees for every month or part of a month unpaid, capped at the fees themselves (regulation 57). Arrear licence fees run at one twelfth of the annual fee per month (regulation 59), and the licensing office generally expects the licence to be up to date before it registers the vehicle to you. The regulations also say no one may sell, deliver or take delivery of a vehicle that has to be registered and licensed unless it is, with its registration certificate going with it (regulation 53(1)). Before you bid, ask who brings the licence up to date, and check the conditions of sale.

Setting your limit

Take your total budget, subtract the fixed costs, and divide what is left by 1 plus the commission rate including VAT (add 0.15 if VAT is charged on the price too). With R150,000 to spend, R20,000 for fixed costs and a commission assumed for this example at 10% plus VAT: R130,000 ÷ 1.115 = R116,592. Stop at the last bid increment below that.

After the hammer: paying, collecting and getting it home

The highest bid at the fall of the hammer is a binding sale governed by the conditions of sale, subject to any reserve and, where a lot is sold subject to the seller’s confirmation, to that confirmation (regulation 28(6) of the Consumer Protection Act regulations). Then:

1. The deposit is paid at the fall of the hammer, and any buyer’s commission as the conditions of sale set out.
2. The balance is paid within the period stated for that auction. The vehicle is not released until funds have cleared.
3. Documents: we provide the notification of change of ownership and the supporting documents. You register the vehicle in your name at a registering authority.
4. Collection is within the deadline in the conditions of sale. Storage charges can apply after it.

What happens after you win covers the wider process, and buying on auction covers registration and FICA.

Can you drive it home?

Where the licence is current, the regulations allow the vehicle to be driven on a public road for 21 days after the change of ownership on its existing plates and disc while you register it (regulation 7(2) and regulation 23(3)). That does not help if the licence had already expired at the sale, and it never makes an unroadworthy vehicle legal: the Act prohibits operating one on a public road.

Otherwise a registering authority can issue a special permit to reach a vehicle examiner or a repairer, or a temporary permit, which needs a roadworthy certificate where one is required (regulation 84). Or bring a trailer. Either way, insure it before you collect.

Registering it in your name: eNatis, roadworthy and the 21-day rule

A change of owner makes the existing registration and licence void, and the new title holder (you, if you bought it outright without finance) must apply to register within 21 days (regulation 6, regulation 8 and regulation 22).

1. Notification of change of ownership (form NCO). The seller, and the title holder if different, complete it and the registration certificate is handed over (regulation 53(3)).
2. Roadworthy test. A used vehicle whose owner has changed gets no licence disc unless it was certified roadworthy within the 60 days before licensing (regulation 138). Repair first, then test, then register inside that window.
3. Application for registration and licensing (form RLV) at a registering authority, with the fees the province sets plus any penalties and arrears.
4. A new registration certificate and licence disc in your name.

Confirm the list with your registering authority, because the province can ask for more.

Red flags that should stop you bidding

• Numbers that do not match the registration certificate, or signs of grinding, re-stamping or a replaced VIN plate.
• No registration certificate and no explanation. Where it has been lost, registering to a new owner can need a SAPS clearance and an affidavit (regulation 8(2)(d)).
• A finance house as title holder, and no answer on settlement.
• A rebuilt write-off. A vehicle deregistered as permanently unfit for use and then rebuilt (the trade calls these Code 3) is recorded on the register as “built-up” and stays that way (regulation 13(4)), so ask about its status. If it has not been registered since the rebuild, doing so is your job and cost, with a parts affidavit (form SOA), the deregistration certificate and a SAPS clearance (regulation 9). Ask your insurer before you bid. One recorded as permanently demolished (Code 4) is, by definition, a vehicle that cannot be made roadworthy.
• A licence that expired long ago: arrears, penalties, and a vehicle that has probably stood.
• An odometer that is not guaranteed, with wear that does not fit the reading.
• Pressure to pay outside the process. Fake auction sites copy real firms’ names and logos. Pay only into the account in the official auction documents, confirm it on a number you found yourself, and never pay to “reserve” a vehicle you have not seen.

We are a corporate member of the South African Institute of Auctioneers; the certificates are on our credentials page. To check a payment instruction that claims to come from us, phone 086 155 2288. Current sales are on upcoming auctions, and the guide to registering and bidding online covers the auction room. If you find one of these after the auction, contact us with the lot number, and take legal advice before you stop a payment or refuse collection.