What Is Volunteer Repossession?

Learn about volunteer repossions.

Purchasing a car can be exciting. Unforeseen financial circumstances, however, may prevent the new owner from enjoying the vehicle. In this case, a voluntary repossession may be the best solution.

Significance

Surrendering a car for volunteer repossession occurs when the borrower becomes unable to continue installment payments on the vehicle. Voluntary repossession lessens the fees associated with the actual vehicle repossession. The borrower, however, is still responsible for the repossession fees.

Benefits

A voluntary repossession makes the process easier for both the financial institution and the borrower. The financial institution will note the borrower's intent to pay and note this favorably on his credit report. The financial institution will bypass using additional collection methods to repossess the vehicle.

Prevention/Solution

To prevent a repossession from showing on the credit report, pay for the vehicle up front in cash. Keep at least three vehicle payments on reserve at all times in the bank account. Make payments on the vehicle five days ahead of schedule.

References

• FairDebtCollection.com: Volunteer Repossession