How to Get Repo Fees Waived and Avoid Extra Charges
Learn practical strategies to reduce or eliminate repossession fees by understanding lender policies, dispute options, and legal considerations.
Having a vehicle repossessed can create significant financial strain, often compounded by additional charges for towing, storage, and administration. These fees can escalate the cost and difficulty of recovering from the repossession.
In certain situations, borrowers may be able to have some of these repossession-related fees waived or reduced. Understanding the potential grounds for challenging these fees and the process involved is crucial for mitigating the financial impact.
Common Reasons Lenders May Consider Waiver
Lenders are not obligated to waive repossession fees, but may do so under specific circumstances. Errors made by the lender or their repossession agent can be a significant factor. If the repossession was wrongful—for instance, if account records incorrectly showed a default, or if legally required notices were not provided before the seizure—a lender might waive fees to correct the error and avoid potential legal action.
The conduct during the repossession process itself can also influence a lender’s decision. Laws governing secured transactions, primarily Article 9 of the Uniform Commercial Code (UCC), require that repossessions be conducted in a “commercially reasonable” manner. Actions by a repossession agent that constitute a “breach of the peace,” such as using threats or breaking into locked property, are generally prohibited. If such conduct occurred, a lender might waive associated fees.
Violations of consumer protection laws, like the federal Fair Debt Collection Practices Act (FDCPA), which restricts deceptive or abusive actions by debt collectors, could also lead to fee waivers. If the conduct surrounding the repossession potentially violates such statutes, a lender may waive fees to limit liability.
A borrower’s prompt actions to resolve the default might also persuade a lender. If the borrower quickly pays the overdue amount and costs (known as “curing” the default or “reinstating” the loan where permitted), the lender may be more inclined to waive certain discretionary fees, especially if the borrower generally has a good payment history. Similarly, voluntarily surrendering the vehicle before repossession might lead some lenders to forgo certain charges, as it reduces their costs and potential complications.
Negotiating Directly with Lender
Contacting the lender directly is a primary step in attempting to reduce or eliminate repossession fees. Lenders incur costs during repossession and may be receptive to negotiation. Prompt and clear communication regarding your circumstances can sometimes result in a reduction of the assessed fees.
When speaking with the lender, be prepared to discuss the specific charges you are questioning, which typically include towing, storage, and administrative costs. Requesting an itemized list of these fees is advisable. While lenders are generally allowed to recover reasonable expenses related to the repossession under the UCC, the definition of “reasonable” can sometimes be negotiated.
Explaining your financial situation and why the fees present a hardship may be part of the negotiation. Some lenders might waive certain charges as a goodwill gesture or to facilitate a resolution, such as redeeming the vehicle or reinstating the loan. Offering a lump-sum payment towards the past-due amount or a portion of the fees could also incentivize a waiver.
It is important to document all communications, including the date, time, representative’s name, and any agreements made. If the lender agrees to adjust the fees, request written confirmation to ensure clarity and provide a record. Direct negotiation does not guarantee success, but it offers an opportunity to potentially lessen the financial burden.
Filing a Formal Dispute
If direct negotiation does not resolve concerns about repossession charges, filing a formal dispute may be necessary. This involves examining the lender’s itemized cost statement and challenging specific fees that seem incorrect, unreasonable, or are not permitted by the loan agreement or law.
Towing Fees
Towing fees cover the cost of seizing and transporting the vehicle. Disputes often focus on whether the fee is reasonable compared to standard market rates for similar services locally, or if the towing distance seems unjustified. Requesting documentation from the lender to substantiate the charge can aid in assessing its validity. The core issue is whether the fee accurately reflects a reasonable cost for the service provided.
Storage Fees
After repossession, vehicles are typically stored, incurring daily or weekly fees. Disputes may arise over the reasonableness of the daily rate or the duration of storage. Standard storage rates in the area can serve as a benchmark. If the lender unreasonably delays the vehicle’s sale process, one might argue against paying storage fees for the period of delay. Issues with required notices regarding the vehicle’s disposition or storage details might also form the basis for a dispute.
Administrative Fees
Lenders might add administrative fees for internal costs related to managing the default and repossession. The validity of these fees depends on the original loan agreement and applicable law. Review the contract to confirm if it permits specific administrative fees. Fees may be disputed if they are not contractually authorized, seem excessive for the tasks involved, or duplicate other itemized charges. The general requirement for commercial reasonableness under the UCC applies to these charges as well.
Legal Remedies
When negotiations and formal disputes are unsuccessful, legal action may be considered. This usually involves suing the lender or repossession company, claiming the fees are unlawful or that the repossession process violated legal standards.
A primary basis for legal action is wrongful repossession, where the lender lacked the legal right to seize the vehicle. If a court finds the repossession was unlawful, associated fees might be invalidated, and the borrower could potentially recover damages.
Even if the repossession was justified by default, the method used can lead to legal claims. Article 9 of the UCC permits repossession without a court order only if done without a “breach of the peace.” Actions typically considered a breach of the peace include using or threatening violence, breaking into locked areas, or causing a public disturbance. If such actions occurred, a court might deem the repossession improper, potentially leading to fee waivers and damages under UCC Section 9-625, which allows for actual damages and, in consumer cases, statutory damages.1Legal Information Institute. § 9-625. Remedies for Secured Party’s Failure to Comply With Article
The UCC (Section 9-610) also requires that “every aspect” of handling the collateral, including assessing fees, must be “commercially reasonable.”2Legal Information Institute. § 9-610. Disposition of Collateral After Default If towing, storage, or administrative fees appear significantly inflated compared to market rates, a consumer can argue in court that they violate this standard. A court finding could result in the reduction or elimination of unreasonable fees and potentially expose the lender to liability for damages under UCC Section 9-625, which could reduce or eliminate any deficiency balance claimed after the vehicle’s sale.
Federal laws also offer grounds for legal challenges. The Fair Debt Collection Practices Act (FDCPA) prohibits abusive and unfair practices by third-party debt collectors. While its application to repossession companies can be nuanced, the FDCPA prohibits collecting amounts (like fees) not expressly authorized by the agreement or law (15 U.S.C. Section 1692f).3Legal Information Institute. 15 U.S. Code § 1692f – Unfair Practices Violations can lead to actual damages, statutory damages, and attorney’s fees (15 U.S.C. Section 1692k).4Legal Information Institute. 15 U.S. Code § 1692k – Civil Liability Additionally, the Consumer Financial Protection Bureau (CFPB) prohibits Unfair, Deceptive, or Abusive Acts or Practices (UDAAPs).5Consumer Financial Protection Bureau. Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) Certain repossession-related practices, such as charging unlawful fees, have been identified as potential UDAAPs. Pursuing claims based on these laws may result in fee waivers and other remedies. Consulting legal counsel specializing in consumer protection law is often recommended for navigating these options.
Denied Requests
If a lender denies a request to waive repossession fees, the borrower generally remains legally obligated to pay those charges, provided they are permitted by the loan agreement and comply with laws like the UCC. The denial signifies the lender’s intent to enforce the contract terms regarding these costs.
The lender’s decision often relies on their interpretation of the loan agreement and the “commercial reasonableness” standard under UCC Article 9, which allows lenders to recover reasonable expenses for retaking and preparing the vehicle for sale (Sections 9-610 and 9-615). A lender may deny a waiver if they believe the charges are justified and documented, even if the borrower disputes their reasonableness.
Following a denial, the disputed fees are added to the total amount owed. This affects options like reinstating the loan or redeeming the vehicle, as the denied fees become part of the required payment amount. Failure to include these fees means the borrower likely cannot regain possession through these methods.
If the vehicle is sold, the denied fees are included when calculating the deficiency balance. Under UCC Section 9-615, sale proceeds cover repossession expenses first, then the debt.6Legal Information Institute. § 9-615. Application of Proceeds of Disposition; Liability for Deficiency and Right to Surplus If proceeds are insufficient, the remaining amount, including the disputed fees, becomes the deficiency balance the lender can pursue. Understanding the reason for the denial and reviewing the loan agreement again clarifies the outstanding financial obligations.
