An impounded vehicle is a ticking time bomb. From the moment the vehicle is towed into an impound yard until the moment it is recovered, the clock is ticking. And with every passing second, more money is being lost and more headaches are being created. The fractured nature of the impound industry, from tax notifications to rules and fee structures that vary by city, county, and state, effectively recovering impounded vehicles quickly can make the difference between being in the black or losing a significant amount of money. One study estimated that 76,000 vehicles per day are impounded nationwide, costing more than $1 billion a year in storage and other fees. An effective impound management program is an essential component of a successful nationwide repossession management operation.
Staying on top of vehicles that have been impounded and being able to recover them quickly and efficiently is a key component to managing a portfolio of auto loans for a financial institution of any shape or size. Maximizing the resources available to you will help you keep that time bomb from exploding and causing a significant loss to your portfolio.
Here are some ideas and strategies to help you effectively manage impounded vehicles.
Perhaps the most important component to an effective management process is knowing when a vehicle has been impounded. That is when the clock starts ticking and potential losses start mounting. Storage fees, recovery fees, plus the fees associated with whatever caused the vehicle to be impounded in the first-place start adding up very quickly. More than 40% of respondents to a survey indicated that they were not notified that a vehicle had been impounded until at least five days after it had occurred.
Financial institutions should be subscribing to a service to notify them when a vehicle has been impounded, so that they can react quickly. As part of an overall asset recovery repossession services platform, impound notifications can go a long way toward boosting recovery rates and helping maximize liquidations.
Companies should not take for granted the fact that they will find out when a vehicle has been impounded. And companies should also make sure that whatever notification service they use also provides the address and contact information for the lot holding the impounded vehicle. Getting access to that information quickly can also save time and money.
EVERY CITY IS A SNOWFLAKE
Being notified that a vehicle has been impounded in a timely manner affords a financial institution the ability to determine what the law allows for with respect to storage fee rates and other fees that an impound facility may charge. Many cities, such as Seattle (https://www.seattle.gov/your-rights-as-a-customer/find-a-towed-car/max-towing-fees-police-authorized-impounds), Austin (How will I be notified of a recovered vehicle and about impound and storage fees? | AustinTexas.gov – The Official Website of the City of Austin), and Chicago (City of Chicago :: Relocated & Towed Vehicle Information) offer information on their websites about how much impound facilities can charge for storage and tow fees. This should be a first stop to determine how much it will cost to recover a vehicle.
An investigation by a TV station in Wisconsin, for example, uncovered a towing company that was charging a $150 fee for every impound where the tow truck driver did not have keys. The $150 fee was only supposed to be charged when there were spatial restrictions that impeded the driver from recovering the vehicle, but the company was applying it to every individual whose vehicle was towed and impounded.
Financial institutions can also take a lesson from swap meets and flea markets and remember that no price is ever set in stone. Anyone seeking to recover a vehicle from an impound facility should learn the art of negotiation and put that into practice. Impound facilities have been known to be willing to negotiate reduced fees in certain circumstances.
HOW MUCH IS THAT CAR IN THE WINDOW?
Storage fees can add up quickly. In California, for example, the storage fee can range between $38 in San Diego to $90 in San Jose per day. When comparing to a market rate for parking a vehicle in those same cities, a consumer advocacy group estimated that the average impound lot costs five times as much as the average parking lot in a given city in California.
Storage fees are largely unregulated and tow yards and impound lots are not above charging more than what they are allowed to or adding additional fees and costs to the total on a vehicle. Storage fee is the main source of income for many companies that specialize in impounding vehicles so they will get creative with what they can charge so they can maximize their revenues. One impound facility in Florida was attempting to charge individuals a late-night gate fee for vehicles that were towed after regular business hours.
Tow companies and impound facilities that charge more than what is allowed may be breaking the law and can be reported to local police. Alternatively, those facilities can be sued. In many cases, threatening either of these options may be enough to convince an impound facility to change his or her mind and do the right thing.
Knowing the local laws and what fees and costs are allowed will put financial institutions on the same playing field as impound facilities and dramatically reduce the risk of being scammed or taken advantage of. In many situations, partnering with a company that knows the ins and outs of impound rules and regulations can help give a financial institution a leg up on those recoveries.
IS IT WORTH RECOVERING?
Now that you have been notified that a vehicle has been impounded and you have figured out how much it will cost to get it back; it is time to answer the most important question — is the vehicle worth recovering? There are several criteria to take into account.
First, what is the condition of the vehicle? Either before it was impounded or during the impound and storage process, was the vehicle damaged in any way? That could dramatically affect its value at auction and how much will be recovered should you take the time to do so. It might be worth asking for photos if the impound facility has them, or spending some money to hire an inspector to view the collateral and complete a condition report. The cost of the inspector should also be figured into the final analysis of whether to recover the vehicle. Knowing the total costs of recovering a vehicle is key to a repossession management services operation.
Should the vehicle be damaged in some way, you may want to take the step of filing an insurance claim to fix whatever is wrong with the vehicle so it can be sold for a higher price at an auction.
The experts at diffusing bombs combine comprehensive knowledge with calculated risk-taking, and that same dynamic is true in an asset recovery management operation when it comes to impound management. Knowing when to recover a vehicle and when not to can make all the difference between a profitable operation and one that isn’t. Follow these steps to keep a bad recovery from blowing up in your face.
Should you lack the expertise, especially at a task as daunting as impound management, the next-best thing is to partner with a company that can effectively manage the process on your behalf. When considering a third-party impound management partner, it’s important to do your research and set up meetings with decision makers and department leaders within the repossession firm. An effective partnership with the right vendor can separate a good repossession management operation from a successful repossession management operation.
Police departments do not just allow anyone with a badge to try to defuse a bomb. Nor do they call someone who is only good at one aspect of the process. They look for an expert who can handle all the intricacies and nuances that go along with fully understanding what is at stake and maximizing the chance of a successful outcome. Financial institutions should not focus on companies that are great at providing notifications, but lack the skills and resources to send investigators to assess the condition of a vehicle. They should work with a provider that is proficient in all of these areas, to ensure the best outcome.