What Happens If a Financed Car Is Impounded?

When a financed car is impounded, it creates a complex situation for the owner and lender, leading to financial and logistical challenges. Understanding the process and consequences is important, as impoundment can have implications from immediate fees to long-term effects on your auto loan and credit.

Identifying the Impounding Authority and Reason

The first step in addressing an impounded vehicle is to determine which authority towed it and the reason for impoundment. Owners can find the impound location by contacting local non-emergency police lines or checking municipal websites, which sometimes provide online search tools.

Vehicles can be impounded by various entities, including local police for traffic violations or arrests, or by private property owners for trespassing or abandonment. City or county agencies may also authorize impoundments for parking infractions or unregistered vehicles.

Common reasons for impoundment include:
Unpaid parking tickets
Expired vehicle registration
Serious traffic violations
Abandonment on public or private property

After identifying the impounding authority, gather key information like the impound lot’s location and any case numbers. Inquire about the specific charges or violations that led to the impoundment, and initial fees. This information helps prepare documentation and understand financial obligations.

Calculating and Managing Impoundment Costs

Impoundment carries financial burdens that accumulate quickly. Initial towing fees typically range from $75 to $250, depending on vehicle type and distance towed.

Beyond the initial tow, daily storage fees commonly range from $25 to $75 per day. These fees accrue daily, emphasizing the need for prompt action. Administrative fees may also be imposed by the impound lot or authority.

Underlying fines or penalties, such as parking tickets or traffic citations, must often be settled before vehicle release. The vehicle owner, even with a financed car, is responsible for all impoundment-related expenses.

The rapid accumulation of these costs requires immediate attention. Impound lots generally accept cash or major credit cards, though policies vary. Understand these financial liabilities before attempting retrieval.

Steps to Retrieve Your Financed Vehicle

Retrieving a financed vehicle from an impound lot begins by contacting the facility identified earlier. Confirm their operating hours and the exact amount due, as costs accrue daily.

To retrieve the vehicle, specific documentation is required to prove ownership and authorization. This typically includes a valid driver’s license, vehicle registration, and current proof of insurance. For financed vehicles, proof of ownership like the vehicle title or a loan statement may also be necessary.

Paying accumulated fees—including towing, daily storage, administrative charges, and any underlying fines—is a prerequisite for vehicle release. Payments must be made directly to the impound lot or relevant municipal authority. Confirm accepted payment methods beforehand to prevent delays.

Before driving the vehicle away, inspect it for any new damage. Document the vehicle’s condition with photographs or video before leaving the lot. This helps in case of disputes.

For financed vehicles, the lienholder or lender may need to be involved. Some impound lots or state regulations may require the lender’s authorization for release. The borrower should determine if a letter of authorization from the lender is needed to facilitate release.

Impact on Your Auto Loan and Credit

Impoundment of a financed vehicle can impact your auto loan agreement and credit standing. Most loan agreements require the borrower to maintain possession and proper insurance. Impoundment could violate these terms.

Notify your lender about the impoundment, as some loan agreements may require immediate disclosure. Failure to inform them could lead to complications, as they have a vested interest in the collateral.

Inability to pay impound fees and retrieve the vehicle promptly can lead to loan default. If the borrower does not retrieve the car, the lender may pay the fees to protect their asset. These paid fees will be added to the outstanding loan balance, increasing the borrower’s total debt.

If the loan defaults, an acceleration clause may be triggered, making the entire outstanding loan balance immediately due. If the borrower cannot pay, the lender may repossess the vehicle. Repossession and late payments from impoundment will negatively impact the borrower’s credit score for several years.

If the vehicle is repossessed and sold for less than the outstanding loan balance, the borrower remains liable for the difference, known as a deficiency balance. The financial repercussions of an impoundment extend well beyond the initial fees.