Storage Fees for Reinstatement After Repossession

After a repossession, the finance company can only impose certain conditions on a buyer reinstating his or her contract and regaining possession of the vehicle at issue. The finance company may tell the buyer that one of those conditions is he or she must pay fees to a third party (such as, the repossession agency) for storing the vehicle. The storage fees the buyer must pay often are hundreds of dollars, making it extremely difficult, if not impossible, for the buyer to reinstate, by paying the past due payments and pay the additional storage fees. Many times, the storage fees result in the buyer permanently losing his or her vehicle and being subjected to an alleged deficiency balance after the car is sold at auction.

Requiring payment of storage fees is not a permissible condition to the buyer reinstating his or her contract unless it serves to reimburse the finance company for amounts it has actually paid or would have to actually pay should the buyer not reinstate. The California Legislature recognized that requiring buyers to pay estimated or inflated fees to reinstate which are more than the fees truly incurred by the finance company could impede a buyer – especially a low income buyer – from reinstating his or her contract. Thus, as of January 1, 2022, the Legislature changed California’s automobile financing laws to clarify that storage fees may be charged for reinstatement only if they “reimburse” the finance company for fees it “actually paid.”

As a result of the clarification in the law, some companies have stopped requiring payment of storage fees for reinstatement. Still, other finance companies continue to require payment of storage fees for the buyer to get his or her vehicle back which have not been and will never be actually paid by the finance company. It is best to reach out to a qualified attorney to review your situation if you are being told by your finance company that you need to pay storage fees in order to get your car back.