A car that is unregistered or that has an expired state registration parked on city streets would definitely be considered an eyesore by most communities, and the municipal government would probably take action to remedy the situation, according to the local laws. These laws may impose a fine for each day the vehicle was parked, and if you did not pay the fine, it could cause problems.
Impound Fees
It is unlikely that an unregistered vehicle parked on city streets would be towed off the first day, or even the first week that it was sitting in one location. Your city likely has laws that specify how long the vehicle may be left on the street before a fine is imposed. Some cities even prohibit parking an unregistered vehicle in your driveway for longer then a certain time period. If the city determines that your on-street parked vehicle is in violation of the law, they will probably have it towed. The tow-truck operator is allowed to impound your vehicle to secure payment for his services and the fines.
Taking Possession of the Vehicle.
With your vehicle in impound, you will need to pay the towing company for their expenses before you can pick up the vehicle. In addition, you may have to pay any fines the city has imposed on you for this violation. If you do not pay these bills, either the city or the towing company can take legal action to obtain the title of the vehicle and then sell it to recoup their expenses. In some areas, this title transfer may appear as a public record, but it would not be unlikely your credit report would list this as they don't routinely review vehicle transfers.
Collections
If the towing operator has a remaining balance due after the car is sold, it will probably send this bill to a collection agency after a certain amount of time. The city or state imposing fines for this violation is also likely to seek the assistance of a collector as well. Cities look at these fines as unpaid bills that need to be collected. The collection service may give you a short time to pay the bill, but then they will likely list it with the credit reporting agencies as a collection account.
Other Considerations
It would be best to take care of this type of problem before the bill gets in the hands of the collector. You may be able to work out a deal with the towing operator where he may accept the title of the vehicle that you sign over as payment in full for the bill. Perhaps he would even pay you enough for the car to settle any fines you have incurred for the unregistered vehicle. Regular communication with both parties, and even a payment arrangement, may keep the incident off of your credit report.
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