01/11/2026
How Financed Vehicles Are Being Seized Through Repair-Loan and Towing Practices
Consumers across Canada are being alerted to practices in the vehicle repair-financing sector that are resulting in financed vehicles being towed, stored, and sold even though those vehicles are already subject to first-priority bank and manufacturer security interests.
Major Canadian banks and auto lenders — including TD Auto Finance, RBC, CIBC, Scotiabank, BMO, National Bank, Desjardins, and manufacturer finance companies such as Toyota Financial Services, Honda Financial Services, Hyundai Capital, Kia Finance, Ford Credit, GM Financial, Volkswagen Finance, Nissan Finance, BMW Financial Services, Mercedes-Benz Financial Services, Subaru Finance, and Mazda Credit — typically hold first-priority security over millions of vehicles in Canada. Under Canadian secured-creditor law, those lenders control how and when enforcement against those vehicles may occur.
In a growing number of cases, a financed vehicle is brought to a repair facility and the consumer is offered third-party “instant repair financing.” The finance company pays the repairer and includes language in the paperwork stating that the mechanic’s lien is “assigned” or transferred to the finance company. The finance company then claims it has inherited the power to tow, store, and sell the vehicle.
Under Ontario law, that structure raises significant legal issues. A mechanic’s lien under the Repair and Storage Liens Act is not a transferable asset. It is a temporary statutory enforcement power that exists only while a specific repairer remains unpaid for specific work. Once the repairer is paid, the underlying debt is extinguished and the lien ceases to exist. There is no remaining lien capable of assignment after payment has been made.
After the repairer has been paid, the finance company is no longer acting as a repairer. It is functioning only as a lender governed by the Personal Property Security Act (PPSA). The PPSA does not grant lenders authority to tow vehicles, charge storage, or sell vehicles by invoking repair-lien powers.
Court materials have identified situations in which entities including Go To Loans Inc., operating as Wippy, and its affiliated towing and storage operation Lienholder Advantage, have issued Notices of Intention to Sell under the Repair and Storage Liens Act even after the repairer has been paid. Registering or asserting a repair and storage lien in those circumstances raises the issue of whether a statutory enforcement regime has been improperly invoked after it no longer applies.
These notices are typically sent not only to consumers but also to the first-priority lenders holding PPSA security over the vehicles. Under secured-creditor law, those lenders are not passive recipients of such notices. The first-priority secured creditor has the legal authority to determine whether a claimed lien is valid, to redeem the vehicle, to restrain an unlawful sale, or to apply to the court for a determination of priority. Borrowers do not possess those legal powers.
When a first-priority lender is notified that a vehicle may be seized or sold and does not take steps to protect the collateral, Canadian law treats that inaction as potential waiver and negligent impairment of security. A secured creditor that allows its collateral to be taken or sold may no longer be entitled to treat the loan as fully secured or continue collecting payments as though the vehicle still exists.
Where a vehicle is disposed of following such inaction, legal remedies may include recovery of payments made after the loss of the vehicle and compensation measured by the replacement value of the vehicle rather than merely the outstanding loan balance.
The issue is amplified by the commercial structure of many repair-finance arrangements. In some cases, the finance company and the towing and storage operation are affiliated. The revenue generated may come primarily from daily storage charges and auction proceeds rather than the underlying repair loan. Vehicles can be held for extended periods, accumulating fees, before being sold at distressed prices.
Additional statutory protections apply when a consumer has paid most of their vehicle loan. Section 25 of Ontario’s Consumer Protection Act, 2002 prohibits repossession or sale of a financed vehicle without an order of the Superior Court of Justice once two-thirds of the total amount payable under the financing agreement has been paid. That requirement applies to banks, manufacturer lenders, and secondary finance companies alike. Any tow or sale after that threshold without court authorization may be unlawful.
Where a consumer remains current on their primary vehicle loan, the financing agreement provides that the lender’s security is the vehicle and the borrower’s obligation is to make the agreed payments. A separate repair-finance obligation does not alter that relationship, does not transfer seizure rights over the vehicle, and does not override PPSA priority rules.
Once a first-priority lender receives notice that a secondary party is asserting seizure or sale rights, responsibility to protect the collateral rests with that lender. If the lender does not act and the vehicle is lost, the resulting loss is legally attributable to the failure to exercise the rights provided under the secured-creditor framework.
Consumers who have experienced a vehicle being seized or sold while they were not in default of their primary auto loan are encouraged to retain all notices, tow records, lien filings, and payment histories.
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