Maximising Returns for Lenders and Financiers

The total repossessed car disposal cost is a critical calculation for banks, SACCOs, and micro-financiers. This process, governed by strict legal protocols, involves several necessary expenses that are deducted from the final sale price. Understanding these costs is key to managing expectations and ensuring the disposal process is both compliant and commercially sound. At Swipe Recoveries Experts Ltd, as licensed auctioneers, we manage the entire disposal process, from repossession to auction. Our goal is to secure the highest possible market price for the asset while meticulously managing and documenting all associated costs to ensure full transparency and compliance for our financial institution partners.

Regulated Costs: The Auctioneers Act & Fee Schedule

repossessed car disposal cost
Swipe Recoveries Experts Ltd

In Kenya, the costs associated with selling a repossessed vehicle via public auction are not arbitrary. They are strictly regulated by the Auctioneers Act (No. 5 of 1996) and, more specifically, the Auctioneers Rules. This legislation provides a clear and legally binding fee schedule that all licensed auctioneers must follow. This framework is enforced by the Auctioneers Licensing Board and is designed to prevent overcharging, ensuring a fair process for both the lender (our client) and the debtor.

The primary cost regulated by the Act is the auctioneer's commission. This is calculated on a sliding scale based on the final sale price (the 'hammer price') of the vehicle at auction. For example, the Rules specify percentages for different value brackets of the sale price. Beyond the commission, the Rules also provide guidance on other recoverable charges, such as costs for advertising the auction, storage, and drawing up the proclamation notice. By adhering strictly to this statutory schedule, Swipe Recoveries ensures that every single cost is justifiable, documented, and legally compliant, which is crucial in the event of any subsequent legal challenge by the debtor.

The Car Disposal Process: From Repossession to Sale

Disposing of a repossessed car is a multi-step process that must be followed precisely to be legally valid. Any deviation can expose the lender to litigation. Our process includes:

1. Secure Storage: Immediately upon repossession, the vehicle is moved to a secure, insured yard. Storage fees begin to accrue from this point, making a swift disposal process crucial.
2. Valuation: A professional, independent valuer is engaged to assess the vehicle and provide a formal valuation report. This report is used to set the 'reserve price' for the auction.
3. Statutory Notices: This is a critical legal step. We issue the mandatory 45-day Redemption Notice to the debtor as required by law, often referencing the Chattels Transfer Act. This notice gives the debtor a final opportunity to settle the outstanding loan balance and reclaim their vehicle.
4. Advertising the Auction: If the debt is not cleared within the 45-day period, we proceed to advertise the public auction. This typically involves placing a gazette notice and an advertisement in a national newspaper with wide circulation, detailing the vehicle and the auction date/time.
5. Conducting the Public Auction: The auction is held at a designated location, and the vehicle is sold to the highest bidder, provided the bid meets or exceeds the reserve price.
6. Post-Sale Administration: After a successful sale, we handle the payment collection and facilitate the logbook transfer process with the National Transport and Safety Authority (NTSA).

A Sample Repossessed Car Disposal Cost Breakdown (KES)

To provide a clear picture, let's illustrate with a hypothetical scenario. Suppose a repossessed sedan is sold at auction for KES 1,200,000. The estimated repossessed car disposal cost would be broken down as follows:


Auctioneer's Commission: Calculated according to the Auctioneers Rules' sliding scale. This would be approximately KES 110,000.
Storage Fees: At a rate of KES 1,000 per day for 60 days (covering the notice period and sale process), this would be KES 60,000.
Valuation Report: A professional valuer's fee typically ranges from KES 5,000 to KES 15,000.
Newspaper Advertising: The cost for a standard auction advert in a national newspaper is around KES 25,000 - KES 40,000.
Miscellaneous Costs: Including proclamation and service of notice fees, approximately KES 5,000.

In this example, the total disposal cost would be in the range of KES 205,000 to KES 230,000. This amount is deducted from the KES 1,200,000 sale proceeds before the balance is applied to the outstanding loan.

Frequently Asked Questions

Who pays for the disposal costs of a repossessed car?
The disposal costs are paid from the proceeds of the auction sale. The total cost is deducted from the hammer price. If there is a surplus after clearing the costs and the outstanding loan balance, that surplus amount must legally be returned to the debtor. If there is a shortfall, the debtor remains liable for the remaining debt.
What is a 'reserve price' in a car auction?
A 'reserve price' is the confidential, minimum price that the seller (the lender) is willing to accept for the vehicle. It is set before the auction based on the professional valuation and the outstanding loan amount. If the highest bid at the auction does not meet or exceed the reserve price, the vehicle is not sold.
How can Swipe Recoveries help reduce overall disposal costs?
Swipe Recoveries Experts Ltd helps minimise costs by managing the process with maximum efficiency. Our swift and compliant procedures reduce the number of days the vehicle spends in storage, which is a major cost driver. Furthermore, our expertise in marketing auction items ensures we attract competitive bidding to achieve the highest possible sale price, which maximises the net return for our clients.