How to Open a Repo Business
The repo business is a billion dollar industry with more than 5,000 firms in the United States. When a person defaults on a car loan, lenders need to get that car back, and they do not want to do this job themselves, according to the Locate Repos, a website that assists both lenders and recovery agents. Many of these businesses operate out of homes or small offices. This can be a lucrative business, according to Locate Repos, because a typical repossession only takes 15 to 30 minutes, and the fees people charge for this service are between $150 and $200.
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Instructions
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Learn how the repo business works and how you will get your assignments by doing some online or offline research on the industry or by working for someone else who has a repo business.
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Contact your Secretary of State's office where you will be doing business to find out if you need a license.
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Make a list of the different markets to establish a client base, such as banks, car loan companies, used car lots, new car dealerships, car rental agencies and private citizens. You can get this information from the Yellow Pages.
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Develop a professional brochure on good paper that lists your services, address and phone number.
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Write a letter introducing your business that you will mail to your prospective clients, along with the brochure you made.
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Call your potential clients. You may be able to set up an appointment to visit them in person.
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Hire a driver. You will need someone to drive you to the repossession.
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Learn how you will produce an inventory and condition report. All clients will require this. Some recovery agents take a picture of the car and include that in the report.
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Set up a fee schedule. However, some of your clients will tell you how much they will pay you. Standard rates from a bank or loan company are $200 and rates from used car dealers are usually $100. Standard rates repo companies charge are $45 for the driver, $15 for the condition report, $25 an hour to locate the vehicle and $15 for insurance.
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Obtain a key cutting machine or set up an account with a local locksmith. Most new cars have a key code assigned to them. The banks know this code, which they will give to you so that you can cut the key.
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Work out a deal with a local towing company or buy your own tow truck. If there is no key code or if the key does not work for any reason, such as the owner changing the lock, you will need to tow the car.
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Tips & Warnings
When contacting banks, ask for the collections department.
Car loan companies deal with more bad loans than banks do because they usually charge higher interest rates.
Used car lots have a lot of work for recovery agents, but usually offer lower pay for the recovery agent.
New car dealerships don't have as much of a problem with repos, according to Locate Repos' website, but they have some, so it is worth checking on. Reasons new car dealerships have problems are if their loan papers have a mistake in them or if the down payment check written to the dealership bounces.
Private citizens usually call the repo business, not the other way around. They find your ad in the Yellow Pages or on Craigslist, for example, and call you if their private car sale goes bad.
You will not always charge to locate the vehicle if the address has already been provided and the vehicle is there.
Working with car rental agencies usually requires a full-scale location investigation. Don't contact them unless you are prepared for this type of work.
Be prepared to deal with angry people. If possible, conduct your repossession at night or while person is at work.
