If you can’t afford your car payments, you can give the vehicle back to your car loan lender. But just because you surrender the car doesn’t mean that the creditor has forgiven the debt or that it has to. (If you’re giving the car back under the assumption that the creditor will write the loan off, think again!)
How can I get out of a financed car?
5 options to get out of a loan you can’t afford
- Renegotiate the loan. You can reach out to your lender and negotiate a new payment plan.
- Sell the vehicle. Another strategy is to sell the car.
- Voluntary repossession.
- Refinance your loan.
- Pay off the car loan.
What will happen if you return your financed car?
If you return the vehicle to the dealer or the finance company because you cannot afford to make the payments or you no longer want the vehicle, this is called a voluntary repossession. Whether the repossession was voluntary or not, you will be responsible for costs and fees under your contract.
Does giving back a financed car hurt your credit?
Voluntarily surrendering your vehicle will have a substantially negative impact on your credit scores because it means that you did not fulfill the original loan agreement. When you voluntarily surrender your vehicle, the lender will sell the car to recover as much of the money owed as possible.
Can I give a financed car back? – Related Questions
What happens if I don’t want my financed car anymore?
Ask for a Voluntary Repossession
In this scenario, you tell the lender you can no longer make payments ask them to take the car back. You hand over the keys and you may also have to hand over money to make up the value of the loan.
How do you get rid of a financed car without hurting your credit?
The only two options that will keep your credit intact and allow you to keep your car is to call your lender and explain the situation, hoping they will work with you, or to refinance your loan.
How much will your credit go down if you return a car?
Expect your credit score to drop anywhere from 50 to 150 points, depending on other credit factors. That’s not to say you should sit back and let your lender take your car. You might still be able to make arrangements with them.
How long does a voluntary surrender Stay on credit?
Voluntary surrender and repossession are loan defaults, which stay on your credit reports for seven years. That type of negative mark will harm your scores, especially your automotive-specific credit scores. The next time you apply for a car loan, you’ll likely be deemed high risk and charged high interest.
Is voluntary repossession a good idea?
When you can no longer afford your car payments, voluntary repossession may seem like the best way to get your car loan off your hands. But returning your car to your lender could have serious financial consequences, including your account going into collections and your credit taking a hit.
Does voluntary repossession affect your credit?
The simple answer is yes, a voluntary repossession affects your credit score. Even if a borrower does give up their vehicle voluntarily, their credit score still takes a hit.
Is it better to surrender your car or have it repossessed?
Voluntarily surrendering your vehicle may be slightly better than having it repossessed. Unfortunately, both are very negative and will have a serious impact on your credit scores.
Can you get another car loan after a voluntary repossession?
It’s possible to secure financing for a vehicle after a repossession, but you’ll have a harder time finding lenders. This is primarily because a repossession signals a default on your loan, which is something lenders are likely to consider when determining whether to extend credit.
Can you return a financed car back to the dealer after a year?
The hard truth is that most auto dealerships aren’t going to let you return a vehicle that you’re financing. Some dealers have a return policy – sometimes around a seven-day guarantee when you’re financing a car sight-unseen without a test drive – but most don’t offer one.
Will a dealership buy my car if I still owe?
What happens if I still owe money on my trade in car? It’s important that you know the pay-off amount – how much you still owe – and the trade value of the car – how much the dealer is willing to offer you. A dealer will then pay off your old loan and give you a credit for the value of your trade vehicle.
Can I sell my car while on finance?
It is illegal to sell a car with outstanding finance to a private buyer without making them aware of this. In order to legally sell your car, you must settle any outstanding finance first.