Starting an Automobile Repossession (Repo) Service

Automobile repossession (repo) services are a booming business in the United States. Many used car lots, banks and car loan services outsource their repossession needs to experienced companies which can take care of the job quickly and effectively. When a consumer defaults on an automobile loan, a repossession service is called to take back the vehicle for a fee.

Automobile repossession services are lucrative because there is such a high demand. Thousands of consumers default on their auto loans each year, which keeps repo services in business. Repossession is also a dangerous job because people are not usually happy to discover that someone is taking their car, so fees are heightened with respect to the risks involved. While most repos go down fairly peacefully, most professionals will run into the occasional belligerent consumer.

Clients of Repossession Services

There are many potential clients for automobile repo services. First, most banks that issue auto loans will outsource repo services to conduct their collection business. This is more cost-effective for them because they don't necessarily have ready access to a towing service or a collection group. Used car lots and new car dealerships are also frequent customers of repo services; rather than hiring full-time professionals for the job, they outsource the work. Other potential clients include car rental agencies, private citizens and car loan services.

Fees Charged by Repossession Services

The fees for auto repo services vary from state to state, but typical fees range from $150 to $350. Sometimes, a fee is calculated based on the risk factor, while other repo services simply charge a flat fee. In addition to the going rate for repossession, repo services might charge a driver fee so that two repo professionals can work on the same job, an hourly skip trace fee to locate the individual and vehicle, a condition report and photo fee so that the car's owner can be apprised of its condition upon pickup and an insurance fee. All of this depends on the size of the automobile repossession service and the amount of time needed to locate and repossess the vehicle.

Key Codes or Towing for Repossession Services

Repo services operate in different ways depending on their needs. Some of the larger businesses have owner-operators working for them or have their own tow trucks to make repossessions easier. Others rely specifically on key codes (which can usually be found on the title to the car) so that the vehicle can simply be driven away once located. Repo professionals who know how to cut keys or who are experts at getting into locked cars will be paid a higher wage by the repo service for their expertise.

Legal Issues for Repossession Services

There are several opportunities for legal problems when repossessing a car. First, the repossession service must call the local police department and given them the VIN number for the car they have just located and retrieved. Many people whose cars are repossessed will report the vehicle stolen and this keeps the police from looking for cars that have been lawfully repossessed. Further, repo services are required to obtain cars peacefully. Breaking and entering is specifically forbidden; if a car is locked in a garage or on someone's property, the repo professional must wait until the car is driven somewhere else before taking it.

In addition to those legal issues, an automobile repossession service should obtain a "Hold Harmless" agreement from all clients so that any damage inflicted on the vehicle isn't the repo service's responsibility. Often, things go wrong during repossessions and it's important for professionals to protect themselves on this dangerous job.

If you're going to start a repossession service, you may have to be licensed by your state. Make sure that you cover yourself legally and financially so that any repos you conduct do not result in legal or civil action. This can be an exciting business, but it is also rife with risks that should be understood before pursuing it.