What Happens When You Voluntarily Repo a Car?

You should only use voluntary repossession as a last resort.

Car repossession means the creditor holding the title on your car takes it back if you miss payments on it. Voluntary repossession occurs when you can no longer afford your car and surrender it before your creditor takes it from you.

Effects

Voluntary repossession is going to hurt your credit as much as involuntary repossession will, according to Bankrate.com. Voluntary repossession will show up on your credit report as repossession. The report may list it as voluntary but voluntary or involuntary, your credit score will drop significantly.

Procedure

Contact your creditor and explain that you want to voluntarily surrender your car. Your lender will tell you how to do this and where to drop off the car.

Outcome

You are still liable for any shortfall after the car sells at auction. This is the deficiency balance. You will save yourself a little bit of money by voluntarily surrendering your car. You won't have to pay the cost of hiring a repo agent, which you are liable for in an involuntary repossession. You should only voluntarily surrender your car as a last resort, recommends Bills.com.

References

• Bills.com: All About Voluntary Repossession
• Bankrate.com: Voluntary Repossession of a Leased Car