How to Start a Repo Business in Arizona
The repossession (repo) business is a very lucrative business, especially during downturns in the economy when more people are having trouble staying current with their car, RV or boat payments. When a person defaults on their loan, the creditor contacts a repo business to recover the property. In order to be the repo business that creditors call in the state of Arizona, there are specific requirements that must be met. The more that you know, the greater chance you have of owning a successful repo business in Arizona.
- Difficulty:
- Moderate
Instructions
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1
Consult with an accountant and an attorney to determine the type of business entity you want to use for the business. You can operate as a sole proprietor or partnership, a limited liability company, or a corporation. There are different tax and legal advantages for each entity and your accountant and attorney should be able to advise you on the best entity to use for your repo business.
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2
Develop a business plan. You need to decide how you will find clients; how much you want to charge; whether or not you will hire employees; what cities, towns and counties you will operate in. A business plan is a crucial road map to success.
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3
Lease or buy a location for your business. You will need an office to work out of and a large enough area to keep the cars that you repossess. You will also need somewhere to keep the company tow trucks if you use tow trucks in your business.
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4
Read Publications and Brochures: "616-Transporting" from the Arizona Department of Revenue. As a repo business owner in Arizona you may be subject to a transaction privilege tax or license under their transporting classification.
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5
Register your company with the Arizona Department of Public Safety, Commercial Vehicle Enforcement Bureau if you use a tow truck. Each tow truck that you own must be inspected by the Department of Public Safety. Familiarize yourself with the applications and regulations relating to operating a tow truck for repossession purposes by reading the following: "DPS Tow Truck Regulations", "Tow Truck Inspection Application" and "Tow Truck Company Registration Application."
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6
Obtain your commercial driver's license (CDL). If you use a tow truck for repossessions you may need a CDL in the state of Arizona. Contact the Arizona Department of Transportation, Motor Vehicle Division to find out if this is a requirement. May sure all employees that you hire that will operate the tow truck have their CDL.
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7
Contact each town or city that you will conduct business in regarding obtaining a business license. In some cases you will need to be licensed by the county instead of a specific town or city. Make sure you are in compliance for each town or city in which you will be operating.
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8
Acquire a license to perform investigative work. This includes skip tracing and is regulated by the Arizona Department of Public Safety. Each employee as well as the business may need to be licensed.
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9
Complete the paperwork to become licensed by the Arizona Department of Financial Institutions. If you will be collecting money such as partial payments on behalf of the creditor, you may need a license. You cannot collect money on behalf of your clients until you confirm whether or not this license is a requirement.
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10
Read the Arizona repo laws. The state of Arizona regulates the towing/repossession industry. Be sure you have intimate knowledge of the laws so as not to break the law or jeopardize your business.
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11
Find clients by marketing your services to finance companies, banks, car dealerships, and private individuals. Call or visit the businesses to solicit business, and place ads in local newspapers to advertise your services to private individuals. Have your price list available, and be ready to demonstrate your knowledge of Arizona repossession laws and what you will do to recover the client's property.
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