Car repossession can be a stressful experience not only for the borrower but also for the lender. One of the many things concerned by car owners is the cost involved. If you are a car owner, it is necessary for you to understand the fees associated with repossession so that you can prepare and manage your finances more effectively.
Definition of Repossession Fees
Repossession fees are defined as fees that are paid by the lenders to repossess your car. Towing and transport fees, storage fees, auction fees, and some other fees are counted as repossession fees. If you are the borrower and you want to get your car back, it will be needed for you to pay all these expenses that have been paid by the lender.
Repossession Fees
Just like repossession laws, repossession fees also vary, depending on a few factors. However, the average one is as follows:
- Towing and transportation fees: $50 – $250
- Storage fees: $20 – $40 per day
- Late fees: Depends on your loan contract terms
- Auction fees: 10 – 15% of sale price if the car is sold at auction
- Legal fees: Vary
For anyone who is curious how are repossession fees in some states in the United States, you can check out the following table:
State | Repossession Fees | Towing and Transport Fees | Daily Storage Fees | Auction Fees | Other Fees |
California | $300 – $500 | $100 – $300 | $25 – $60 | 10% – 15% | $15 fee (local law enforcement) |
Florida | $300 – $500 | $50 – $250 | $20 – $50 | ||
Georgia | $300 – $500 | $75 – $200 | $20 – $50 | Late payment fees vary depending on contact terms | |
Illinois | $300 – $500 | $100 – $300 | $100 | ||
Ohio | $25 | Up to $17 for cars under 10,000 lbs | Late payment fees vary depending on contact terms | ||
Texas | $300 – $400 | $50 – $250 | $20 – $50 | 10% – 15% |
Factors that Affect Repossession Fees
Repossession fees are influenced by several factors, such as:
- Asset type: The first factor that affects the repossession fees is the type of asset. In this case, cars are included in automobiles. The repossession fees can include towing fees, storage fees, auction fees, and some other fees.
- Asset condition: The condition of the asset can also influence the repossession fees. The cost may be low if the car is a well-maintained one. In contrast, the cost may be high if the car is a damaged one.
- Legal fees: In order to handle the process of repossession, it may be needed for someone to hire a lawyer. When the person uses their service, they need to pay for court filings, notices, representation, and so on.
- Administrative fees: Repossession process requires documentation and preparation. In order to prepare everything, money is needed.
- Location and accessibility: The location of the car also plays a big role in repossession fees. If it is located in a crowded urban area or in a remote or area that is not easy to reach, the fee may be high.
- Borrower cooperation and communication: If the borrower is pretty cooperative and is open to communicating with the lender and repossession agent, the repossession fees can be minimized. If the borrower is the type of person who tends to prolong the process and is uncooperative, the cost can be higher.
- Storage: After repossession, it needs a repossession car to be stored. The fees for it can be added over time.
- Maintenance: If a repossession car has to be repaired or upkeep during storage, the repossession fees can be added up.
- Auction and sale process: Just like any other repossession assets, repossession cars are also usually sold at auction. The process of auction is known to involve extra fees, such as auctioneer fees and the fees for ads, affecting the repossession fees.
- State laws and regulations: Repossession procedures and fees may vary from one state to another. The repossession fees are limited in some states. However, they may be more flexible in some others.
- Third-party services: Usually, a repossession agency or a towing company is hired by a lender to handle the repossession process. It can add the repossession fees.
Avoiding Repossession Fees
If you are a borrower who wants to avoid repossession fees, you are recommended to do the followings:
- Reach out to your lender: If you have a hard time in paying repossession fees or have a hard time financially, do not hesitate to contact your lender. Please do it as soon as possible and do not wait until it is too late. When contacting the lender, make sure to not hide anything and just be honest with your current situation. Talk to them to find alternative payment arrangements. Once an agreement has been reached, do not forget to get the evidence in writing.
- Refinance or loan modification: In order to minimize monthly payments, try to find refinancing options or loan modifications.
- Sell the car: It is better for you to consider selling your car if repossession is about to happen. The money that you get from the car can be used to pay off your loan. Before selling your car, do not forget to review your financing agreement and see whether or not you will be charged for paying off your loan early.
- Find other ways to save money: One of the ways to save money is to not spend money on things that you do not really need.
Bottom Line
In conclusion, repossession fees may differ depending on several factors such as asset type, asset condition, legal fees, administrative fees, location and accessibility, borrower cooperation and communication, storage, maintenance, auction and sale process, state laws and regulations, and third-party services. On average, they range from $150 to $400. However, they can be higher. If you want to determine your specific repossession fees, you are suggested to check your loan agreement and contact your lender. Ask them to provide you details on the fees that you might be responsible for. If you think you cannot pay the repossession fees, discuss with the lender and find the best option for you two.
