The Car May Be Behind A Fence — But The Financial Damage Doesn't Have To Stay There
Your car gets impounded. The bill climbs into the thousands. You can't afford to retrieve it, so eventually you reach what feels like the obvious conclusion:
“Fine. They can keep the car.”
Except there's one small problem with that financial strategy.
The car disappearing doesn't necessarily make every dollar you owe disappear with it. Depending on what you owe, who you owe it to, whether the vehicle is financed and what happens after you stop dealing with the situation, an impound mess can potentially turn into something much bigger than losing your transportation.
And yes, under some circumstances, your credit can eventually become part of the collateral damage.
No, An Impound Doesn't Automatically Destroy Your Credit
Let's clear this up first. Getting towed or impounded does not automatically mean somebody immediately reports an “impound” to the credit bureaus and your score falls through the floor That's not the point. The danger is what can happen afterward when bills and financial obligations connected to the situation remain unpaid.
An unpaid debt may potentially move into collections depending on the circumstances. If you're financing the vehicle, your auto loan doesn't simply evaporate because the vehicle is sitting in a tow yard. And if you stop making your car payments because you no longer have possession of the vehicle, now you've potentially created an entirely separate credit problem. It’s one ugly situation can start producing multiple bills.
The Car Is Impounded. What About The Money? |
Potential Problem |
|---|---|
| Tow/storage charges | May continue accumulating |
| Unpaid impound-related balance | May require further collection |
| Monthly auto loan | Still exists |
| Stop making loan payments | Delinquency can damage credit |
| Vehicle eventually sold/disposed of | Doesn't automatically erase every debt |
| Ignore everything | Not actually a payment plan |
“They Have The Car” Is Not A Financial Settlement
This is where things can go spectacularly wrong. Owners sometimes assume the vehicle itself is payment enough. The tow company has the car, so everybody should be even.
Unfortunately, that's not necessarily how the math or the law works.
What happens to an unclaimed vehicle and outstanding charges varies by jurisdiction. A vehicle may eventually proceed through applicable lien, abandonment, sale or disposal procedures. And if the vehicle is financed, there's another party at the table: your lender.
You signed a loan agreement promising to repay borrowed money. Losing access to the collateral doesn't automatically cancel that promise. So if your strategy becomes “I'm not paying for a car I don't have,” you need to understand that your lender may have a dramatically different interpretation of the situation.
An Auction Isn't A Giant Financial Eraser Either
Suppose the vehicle eventually gets sold. Owners can make another dangerous assumption: “Great. They'll sell it, everybody gets paid and we're done.”...Maybe....Maybe not.
There can be towing charges, storage charges, lienholder interests, sale expenses, outstanding loan balances and other amounts involved depending on the situation. The sale of the vehicle does not guarantee that enough money exists to satisfy every obligation connected to it.
That's how somebody can end up in the particularly miserable position of not having the car and still having financial problems related to the car. That's not exactly the fresh start anyone was hoping for.
Deal With The Vehicle Before The Vehicle Deals With You
If your car is currently impounded and the bill has become impossible to manage, pretending the vehicle no longer exists is tempting. Don’t !
Find out exactly what the tow facility says you owe. Know whether storage charges are continuing. Find out what deadlines apply. If the vehicle is financed, understand your current payoff and keep communicating with your lender.
Most importantly, find out whether the vehicle itself still gives you another option. Depending on its condition and value, ownership documentation, lien status, tow facility and individual circumstances, OUTPOUND may be able to purchase an eligible vehicle directly from impound.
If you already know you can't afford—or simply don't want—to retrieve the vehicle, contact OUTPOUND.com before doing nothing becomes your most expensive decision yet.
Because losing your car is bad enough.
Losing the car, still owing money and potentially damaging your credit afterward? That's the kind of three-for-one deal nobody asked for.