I get this question all the time "what happens when I donate my car". Generally when a car is donated the Charity that it is donated to will auction the vehicle through a local auction house. Typically these auction house have licensed automotive professionals that come by every week to review and purchase their inventory. Each auction does things a little bit differently but the end result is that a car dealer will purchase the vehicle. The dealers purchase the vehicles with very, very, little information. The vehicles are either left in place in a big parking lot and can be run through quickly, or are driven by the dealers and they all place bids as the car drives by. A lot of times the dealer doesn't know what they are buying and this is reflected in the pricing.

Auctions bring a good 30 percent less generally than would a retail sale. This is mostly due to risk. I would never buy a car without a test drive, but dealers do it all day every day. They never have the opportunity to shake out the problems so they build a buffer into their bid for repairs. These are called "Red Light" cars which is the category that Donated vehicles fall under.

Green light cars are inspected and guaranteed against major defect and can be driven for a period after the sale. These cars are typically purchased much closer to retail value.