What is a repossession fee?

A repossession fee is a charge incurred when a lender or creditor takes back an asset, such as a vehicle, due to the borrower's failure to make timely payments. This fee typically covers the costs associated with locating, towing, and storing the repossessed item. It can vary based on the lender's policies and the expenses involved in the repossession process. Ultimately, the borrower may be responsible for this fee in addition to the outstanding debt.