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Category: Finance
Satisfied Customers: 4522
Experience:  Tax professional and business consultant for 35 years.
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A few months back one of my trucks went into repossession

Customer Question

A few months back one of my trucks went into repossession status. The vehicle was never repossessed and now the finance company is trying to charge me almost a $1500.00 close out fee stating that the agent charges fees based on the amounts paid while the file was assigned to them. Im in the state of NY and I cant seem to find any info on industry standard fees.
Submitted: 1 year ago.
Category: Finance
Expert:  PDtax replied 1 year ago.

Hi from Just Answer. I'm PDtax, and will assist.

Industry standard addon fees in repossession won't help you with your settlement with your lender. Each contract has language allowing them certain rights and collection costs in event of default.

Expert:  PDtax replied 1 year ago.

A review of your contract will spell out what rights there are if and when you defaulted. I can explain some industry secrets, so you are aware of how this part of lending really works.

All of the costs that a lender incurs when you default are marked up by the lender. Repossession fees for the last one I was involved with was $900 for repo costs, but the tow company got $250 plus some storage. The lender marked up those costs. Same with legal. The attorney agrees to a flat fee, and the bank marks that up.

The bank will argue that their language in default allows this, and that so many repossessions cause losses for the bank that they mark them up to help pay for those they will never get.

Expert:  PDtax replied 1 year ago.

If your vehicle was not repossessed, but the file went to the attorney, the attorney opened a file and is entitled to his fee. I can suggest negotiations with your bank that might get the amount down.

If you are otherwise a good customer, with your banking and borrowing business there, you might be able to negotiate a settlement of a portion of the fee, especially since the bank won't want to lose a good customer.

Expert:  PDtax replied 1 year ago.

Keep in mind the attorney might have been able to bill the bank $300-$400 or so to open a file. If your offer at least covers that cost, you might be able to settle for less. If you have other loans, you might be able to refinance them elsewhere at lower rates, but I would get prices for the new loans before I called my bank. That's just good information to have when you want to make a deal with a lender.

I hope that sheds some light on the repo fees, and gives you a settlement option. Thanks for asking at Just Answer. Positive feedback, and a bonus if warranted, will be appreciated. I'm PDtax.