If you get convicted of a crime, the court may require you to pay a fine as part of the punishment. If you fail to pay the fine, it can lead to you being sentenced to jail. This is similar to auto auction dealers failing to pay for their vehicle and being entered into KO Book (or “Auction Jail”, as our Dealer Registration Specialist, Marlene, calls it.)
Since 2008, Big Valley Auto Auction has helped thousands of registered dealers find the right inventory for their lots. Unfortunately, there are instances when we’ve had to input certain dealers into KO Book.
In this article, you’re going to learn what KO Book is, what causes entry into KO Book, what happens if you’re entered, how to avoid being entered, and if you can find your way out of KO Book.
After reading this article, you’ll have the information needed to fully understand the role KO Book plays in the auto auction industry.
What is KO Book?
KO Book, known as Knockout Book through Auction Insurance Agency (AIA), is a list of dealers considered uninsurable by floor plan creditors. KO Book can prevent you from future floorplan financing and participation in auto auctions. Other auto auctions will be notified and they may ban you, due to your history of non-payment and lack of insurance. (You can see why our Dealer Registration Specialist refers to KO Book as “Auction Jail.”)
What Causes Entry into the KO Book?
There are 2 situations that can lead to you being entered into the KO Book:
- Defaulting on your floorplan
- Non-Payments
Defaulting on your Floorplan:
If you fail to repay the flooring company’s loan used to purchase your vehicle, you will be placed in KO Book.
Non-Payments
Failing to pay for the unit will also lead to your entry in KO Book.
If you default on your floorplan or don’t pay for the vehicle, the costs would fall on the auto auction. The auction will have to make an insurance claim, which will make them less likely to want to do business with you.
What Happens if I’m Entered into KO Book?
Entry in KO Book will affect your reputation as a dealer. Once you've been entered into KO Book, your name will remain there, with a history of past defaults. This will serve as a resource for auto auctions to be aware of any potential future defaults.
How Do I Avoid Going into KO Book?
There are 4 tips you can follow to avoid being entered into KO Book:
- Make payments on time
- Have sufficient funds to pay for the vehicles
- Don’t overbid
- Pay floorplan
If you're going to buy or sell at Big Valley Auto Auction, there are 3 rules you need to follow, as well.
Our Rules:
- Payment must be made before 5:00PM if the vehicle was sold on the block.
- If the vehicle is on-call, you have until the next day to call.
- Failure to make payment on time will lead to a late payment fee of $150.00. After that, we report to AIA.
Can I Be Removed From KO Book?
In movies, people escape jail by digging a hole in their cell wall and crawling out. Sadly, that doesn’t work with auction jail. It’s nearly impossible to escape KO Book. You can pay the amount to be cleared, but your information will remain listed until you are able to reinstate your bond.
Although it’s difficult to remove yourself from KO Book, you may qualify for a cash-only exemption. This allows you to pay for your vehicles in cash, as your checks will not be insured.
However, the exemption only works for the 1 specific auction. For example, Big Valley Auto Auction can call Auction Insurance to verify your eligibility. If you qualify, you can participate in our auction, but only our auction. You won’t be cleared for other auctions, without communicating with them first.
Can I Still Sell If I'm in KO Book?
You are still allowed to sell at Big Valley Auto Auction on a case-by-case basis, at Big Valley Auto Auction’s discretion.
Do I Understand the Importance of KO Book in the Auto Industry?
Just like being in jail can keep you away from the outside world, being in KO Book can keep you away from auto auctions. But knowing what KO Book is, what causes entry into KO Book, what happens if you’re entered, how to remove yourself, and how to avoid being placed in KO Book is important to know as a car dealer.
Whether you’re a dealer currently in KO Book or you’re trying to avoid being entered, you can use this article as a guide of what KO Book is and how to prevent yourself from going to “auction jail.”
Being in KO Book doesn’t completely disqualify you from attending Big Valley Auto Auction. If you'd like to buy or sell at Big Valley Auto Auction, click the button below to speak with our Dealer Registration Specialist to get you registered. We can discuss your situation and see if you qualify for a cash-only exemption at our auction.
Not ready to talk? That’s okay! First, learn more about what it’s like to buy and sell with Big Valley Auto Auction by clicking the image below:
