In terms of your credit, voluntary repossession can be the better option if you communicate and cooperate with your lender early on. In most cases, lenders would rather work with you than spend the time and money on the repossession process. Written by humans.
Surrendering is just repossession without the game of hide-and-seek. It still destroys your credit and doesn't rid you of the debt. They'll auction the car, almost certainly for less than it's worth, and still stick you with the remainder.
What Happens if I Voluntarily Surrender My Car? If you voluntarily surrender your car, you can avoid some of the extra costs associated with repossession, such as towing and storage fees. But you'll still be responsible for paying the deficiency balance if the car is sold for less than the amount you owe on the loan.
Voluntary surrender is a direct alternative to involuntary repossession, when a car can be taken without warning, at any time and place, causing emotional distress and potentially leaving you and loved ones stranded. In many states, a lender can repossess your car as soon as your payment is late.
Having your car repossessed or surrendering it voluntarily is seen as a major negative event by lenders. They'll view you as high-risk. Expect your credit score to take a big hit, maybe over 100 points or more. That makes getting approved for financing in the future much harder.
“Surrender is what happens when you've come to the end of your power. Surrender is what happens when you've searched to the bottom of your soul and found out this truth, which is that you can't do this thing anymore. Surrender is what happens when you don't have any more ideas about how to fix everything.
If you voluntarily surrender your car, then you won't be charged for the lender's repossession costs. Generally, this means that the deficiency judgment against you will be lower if you voluntarily give the car back. Another reason to choose voluntary repossession is that it might look better on your credit report.
Note: If you're selling a car with an active loan, you're still the one responsible for paying it off, so the remaining balance on the loan will likely be subtracted from the price the dealer offers you. So if you owe more than what the dealer offers, you'll need to pay the difference to the lienholder.
Yes, it is possible to get out of a car loan, but there are only two ways to do it: satisfying the terms of the loan or defaulting on the loan (which can end up with your car being repossessed). Unfortunately, it's not possible to just give back a car and end the financing agreement as though it never happened.
If you can't afford your car payments, you can give the vehicle back to your car loan lender. This option is called a "voluntary repossession." But just because you surrender the car doesn't mean that the creditor has forgiven the debt or that it has to.
In most instances, yes, you can trade in a car with a loan, and some dealers might roll your remaining balance into a new loan. But trading in your car doesn't make your loan disappear. You will still have to pay off the remaining loan balance that your trade-in amount doesn't cover.
Reasons to Voluntarily Surrender Your Car
“One, if you really can't afford payments, then it would probably be best to unload those payments,” he says. “Likewise, if your loan is underwater, meaning you owe way more than the car is worth.
While surrendering the vehicle voluntarily may be seen more favorably by lenders compared to repossession, it can still result in a substantial drop in your credit rating. Additionally, you may remain liable for any shortfall balance after the vehicle is sold at auction, further adding to your financial obligations.
There's nothing stopping you from buying a vehicle with cash immediately after a repossession – but financing can be another story. Within one year after a repo, qualifying for an auto loan can be tough.
If the account in question is closed due to charge-off, repossession or voluntary surrender, it will remain part of your credit report for seven years from the original missed payment that led up to that derogatory status. That date is referred to as the original delinquency date.
Another option is to give up the vehicle to the lender voluntarily rather than going through the repossession process. The lender may find this option appealing because it avoids the costs of repossession, and it may agree to reduce or eliminate the deficiency balance on the loan.
You can renegotiate, refinance or sell your vehicle to get out of a car loan you can't afford. Refinancing can be a good option if your credit score has improved since you initially took out the loan. When trying to exit a lease early, be aware of potential fees and consider transferring the lease to someone else.
If your lender can't locate your vehicle to do a "self-help" repossession, they can still sue you for the vehicle. This will involve a small claims case, where the judge will order you to give the car to the lender. You might even be compelled to Court to provide testimony about the location of the vehicle.
Oftentimes, the dealership will finance the negative equity into your new loan. This decision can cost you even more when you consider the interest charges on the additional amount financed and the fact it will contribute to you being underwater on your new car too!
Surrender is an empowering form of release.
By surrendering, you are choosing not to fight or control your circumstances and emotions, but rather to be open and receive whatever comes your way—for better or worse. You may be thinking “I don't want to give up control!” But in doing so, you give up power over yourself.
In the surrendering process, one should: (1) accept things favorable for discharging devotional service, (2) reject things unfavorable, (3) believe firmly in the Lord's protection, (4) feel exclusively dependent on the mercy of the Lord, (5) have no interest separate from the interest of the Lord, and (6) always feel ...
If the intention to surrender is indicated in an absolutely clear manner, the adversary must cease fire immediately; it is prohibited to refuse unconditional surrender. 12 Surrender must be unconditional and under certain circumstances it confers the status of hors de combat with limited legal protection.