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You tried to negotiate with the financial institution. Maybe you could make partial payment on the overdue amount and continue to use the car, you thought. But the deal fell through and the car is about to be confiscated. It may sound grim, but many second-hand cars on the market had their origin in repossession.

An increasing number of seized cars are circulating in the market. As potential buyers, what should we know about this "matchmaking" process? What happens in between the confiscation and the car being purchased in a second-hand car showroom?

To track the matchmaking process, we'll follow the money trail from the beginning.

The first expense occurs from outsourcing debt service providers. When cars are brought back, some are auctioned on an "as is" basis. Others are fixed up so that they are auctioned at the highest price.

Then come expenses from auction organisations. They act as a middleman or "matchmaker" to offer auction cars to interested clients. They want auction fees in return. Cars to be auctioned usually come from financial institutions. At present, car auctions are held in Bangkok and the major provinces. Several bidding rounds are set for different categories of cars, such as low-priced or quality cars.

Due to an increase in losses on auctioned cars, some financial institutions are organising car auctions themselves, hoping to save operating costs by selling the cars directly to interested clients, known in the industry as "matched lovers", in order to get better prices. Rather than being parked at auction houses, the cars can be better maintained. In addition, customers can apply more easily for hire-purchase loans from the same financial institutions.

Finally, when the gavel hits the block and the cars are auctioned off, some will be passed through a process for hire purchase with financial institutions. Their status is then changed from seized cars to new cars in order to be released from the former debt burden. This is the final expense in the matchmaking process, but not the last, of course, for new owners.

Matchmaking of seized cars might be done overnight or take forever.

As oil prices have increased dramatically and are unlikely to drop, people are increasingly shifting to mass transportation, with unavoidable effects on the second-hand car market. If the situation continues, second-hand car prices will drop sharply.

However, more people are buying second-hand cars to convert their engines for NGV or LPG consumption.

If you can't find your favourite make of car, ask the financial institutions that organise car auctions. You can get a good quality car at a cheap price. The question arises: what is essential for selecting cars at auction?

Don't miss the next article for tips on selecting the best second-hand cars.