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How To Start A Repo Company: Tips And Tricks (2023)

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As people live, getting loans to finance big purchases like cars, fancier vehicles, and furniture has become common. But some people need to catch up on their payments. When that happens, the institution loaned the money hires a repo firm to repossess the item. Follow this article to figure out how to start a repo company from the ground up.

But what exactly is a Repossession business? How does it work? How do you start one and make sure it succeeds? Starting a new business venture can be overwhelming, so let EconSidekick help you.

Starting a Repossession Company: Essential Steps and Proven Strategies for Launching and Growing Your Business

What Are Repossession Businesses?

Repossession (or repo for short) companies are neutral third parties to loan contracts. These businesses are called by lenders to repossess items by sending out repossession agents, afterward sold at auctions, so at least some investment is recovered. Some repossession business firms work on fixed fees per repossession, varying according to how much the recovered item is worth.

Not all cases are as easy as driving up to get something. You may end up with a repossession where the borrower might’ve moved without warning or left the area entirely. In those cases, additional research will be necessary.

And it helps you compete in the market if you specialize in a specific area. The repo businesses with the highest demand are motorcycles, boats, vehicles, and furniture.

What Is The Industry Like?

There has been steady growth in the repo business over the past few years, even though the economy is improving. With a regular economic flow and access to credit unions, people are more inclined to acquire goods through loan companies, which sometimes will require financing. In turn, creditors are more likely to offer loans with higher risks.

And that may lead to people defaulting on their payments, making the services of a repossession business necessary. Repossession as an industry is already worth over a billion dollars as of twenty-twenty. Several factors have a continued influence over this industry too.

The background of those who need to finance purchases is changing. An increasing number of people have more than one employment option. Many more are freelancers, which is a financially unstable situation.

As a future business owner, you should also be aware of the more human side of this industry. There are risks to repossessing private property since people might not take it well. Agents must not break the peace or cause property damage. Breaking the peace may involve law enforcement, incorporating violence, or trespassing. It’s best if your agents are trained to not interact with customers.

Something else to remember is how long companies can store more essential items for free. The number of days repossession companies can keep them is four. More than that, it’ll increase the storage costs or alter your repossession license. You may want to create additional space for storing items. 

The longer you save items such as vehicles with you, the longer it takes to be auctioned. That’ll delay the auction and decrease its value.

The Ideal Business Owner

Repo Agents: The Key Players in Repossession - Roles, Responsibilities, and Requirements for Successful Recovery Operations

While it is true that you don’t need a business degree to lead your company, be it as a franchisee or with a sole proprietorship, you do need a few things to be a good leader. Let’s check out how they relate directly to a Repossession company.

Detail Orientation: 

Focusing on the little things can help you quickly identify what items you are repossessing. It can also be advantageous when getting the item since it makes you more aware of the possible damage.


Most interactions in this industry require faith. Whether agents are dealing with the company that hired them or directly with customers, being self-assured is necessary.

Conflict Management: 

Repossessing personal property can go south quickly. If you or your agents don’t have strong conflict resolution skills, you may end up in sticky situations. So hone your skills to avoid conflict and solve it quickly when it happens.

Work Under Pressure: 

As discussed, working with a repo business may lead to high-pressure environments. Hence, people in this industry need the ability to keep their wits about them all the time.

Leadership Experience: 

When starting a new business venture, regardless of area, it helps to have previous experience in management. It will make you better equipped to deal with all your challenges.

Industry Knowledge: 

This looks different depending on your area of choice, but for repo services, it’s mostly about state repossession regulations and the type of product you’re repossessing. Since the rules differ in every state, you need to be on top of your game to avoid violations. If there are violations, this gives the lessee an advantage in potential court cases. 

As for the product you’re repossessing, why does knowledge matter? If your licensed recovery agent is repossessing a boat, they need to have experience with driving and working around it. You don’t want to send out people who cannot handle a specific action.

If you are still here, that means you have all of these characteristics inside you and are ready to go into the repo business. But looking at the big picture of starting this type of business can be overwhelming, so here are a few steps to help you.

How To Start A Repo Company:

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Decide On Your Niche: 

There are several areas you can focus on when setting up your repo business, primarily because you can finance just about anything nowadays. People are getting loans to buy houses, lease cars, and even planes aren’t out of the question. So focusing on your potential clients gives you a chance to specialize in the area and be the best in it.

Know Your Competition:

Ironically, the key to being a strong competitor in the repo business is knowing your competition. You can do that by doing online searches in some directories or maybe even yellow pages if they are still a thing where you are inserted. Sometimes the local market may already have a repossession business in your area. Explain why your company is better than each, like quality analysis or service cost.

A Franchise Or From Scratch:

Your beginning may be buying a franchise from well-established repo companies or forming a partnership with institutions with more business assets. You can also broker deals with leasing companies if you want to invest in the repo industry.

People have all sorts of reasons to work on a business idea, but usually, it’s about independence. If you want complete control of your endeavors, a brand you can one day pass on to your family or franchise, then sole proprietorship may be your best choice.

If you are more focused on making money to multiply your wealth, buying a franchise from an already successful company is an excellent way.

Business Entity:

Setting up any company is a severe matter, hence why the type of business entity you go for and which business license to get can go a long way for its future. It determines how big your business can grow. Choosing what legal entity you will adopt for ventures like repo companies is worth the time investment initially, even more so if you want to go a long way.

There are a few options to choose from as the legal entity for your repo business. The first is a general partnership, a limited partnership, a Limited Liability Company (LLC), then a ‘C’ or ‘S’ corporation. It’s essential to remember that each of these legal structures has its limitations and advantages, which is why you’ve got to think about this before beginning.

A few things to consider before choosing a legal entity for your repo business are personal liability, easiness of transferring ownership, admitting new owners, and tax-related company.

Name Your Baby:

There are no set rules when it is finally time to name your repo service. Calling your business takes time. And that happens because, unlike other types of business, repossession companies don’t need to rely on a catchy name to attract people passing by. Because of that, there isn’t exactly a rule of thumb for just naming.

Get The Certification:

What training is needed for repo agents is particular to each state, so check with your local government for their requirements. It may be necessary to take a training course for collections agents, covering repossession law, telephone skills, and some computer training. This course also includes skip tracing methods, so people can use databases and public information to find whoever has the item being repossessed.

Your state may ask you to complete the CARS (Certified Asset Recovery Specialist) certification program, valid nationwide. This one teaches about state and national laws, recovery and post-recovery of assets, skip-tracing, contract law, personal and property crimes, defensive driving, ethics, and insurance.

The repossession industry is highly regulated in the United States and all over the world as well. It has to be done to avoid expensive mistakes in repossession actions. When you start your repo company, plan according to licensing requirements. You must meet every legal requirement as stipulated by the place you’re at.

Plan Your Repo Business:

Making it this far proves you want to start your own company in the repo industry. Along with every other step, you should also have a solid business plan. It is imperative to have one in place to successfully run your business.

Your business plan is the skeleton your company needs to succeed. With proper assistance, you will initially diminish the amount of trial and error. You will also be able to manage everything better and make keener decisions while knowing what should come next and how to handle each change.

The whole deal with creating a plan is about more than having it in place; it should be a detailed guide on how your company will run smoothly from the get-go, including financial projections, business licenses, liability insurance if necessary, and the likes. Including the future with a solid plan to manage and grow the business is good. Be realistic. Don’t over-project numbers on your income and profits. It’s better to underestimate and be pleasantly surprised. 

Settle Down:

Choosing where to settle down with your repossessing company is something to be done with the help of experts. After all, getting the location of your proverbial tent wrong may lead to struggles in making your business happen. A less-than-ideal starting place is one of the main reasons companies fail.

You can sell your brand virtually anywhere once your business is solid, with proven success. On the other hand, choosing to locate your business in an area with a thriving business scene is best starting from the ground up. Creating a lucrative company can be easier if you pay attention to details.

Here are some of the things you should take in before picking a spot for your repossession company:

  • the local demographic of the area and potential clients;
  • how accessible the location is;
  • how many repossessing companies are around;
  • local laws and regulations;
  • vehicle Traffic, parking spots, and repossession indexes.

We hope this article sheds some light on your future, showing that starting a business doesn’t have to be that complicated!