When shopping at a car auction, many people use the “stoplight system” to determine if a vehicle is a good purchase or not. This is an important system to know for two reasons. First, using the stoplight system can help you find the best repo car for your needs. Second, when you understand the stoplight system, you’ll know what the sellers are talking about when they use terms like “red and yellow light.”
Let’s learn more about the stoplight system and how to use it to your advantage during live or online auctions.
What is the Stoplight System?
Auctions have a standard light/video display system to describe the condition and/or disclosures related to the vehicle being sold. It’s an easy and straightforward way for sellers to communicate and for buyers to know what they’re bidding on.
Here is how the stoplight system breaks down:
- Green light. A green light indicates that a vehicle is ready to “ride and drive.” If you see a car with a green light, it means that the vehicle is free from any known defects. If anything major turns up with the car, arbitration is possible.
- Yellow light. A yellow light is more common with repossessed vehicles because it limits arbitration. Vehicles with a yellow light have some acknowledged issues, so arbitration is not an option.
- Red light. When it comes to repossessed cars, red lights are most common. This is not to say that the vehicles are in poor condition but rather that they are being sold as-is. Because repo cars are sold in their current condition, they often fall into this category. Arbitration is not an option.
- Red and yellow light. It’s possible for a vehicle to have both red and yellow lights. What this means is that the vehicle will only qualify for arbitration under the rules in the policy. Essentially, you’re buying an as-is car with no arbitration.
- Blue light. This light is used to tell buyers that the title is not present at the time of sale.
Know Your Buyer Responsibilities
As the buyer, it’s important to know what your responsibilities are. Being a smart and savvy shopper ensures you get a good vehicle that is safe and fairly priced. At RepoFinder, we strongly encourage all buyers to schedule a post-sale inspection (PSI). It’s also possible that the vehicle has the original warranty intact. You won’t get any dealer warranties, but if the vehicle is still under warranty, this will be transferred to you.
Between using the stoplight system and having a post-sale inspection done, your chances of getting a good quality repo are much higher. To start your search for a repo vehicle, click on your state on our homepage and view the banks with repos available!