Good afternoon. Your only real option is to sell the car and pay any deficiency in order to minimize the shortfall. Otherwise, the lender will repossess the car, sell it at wholesale, and stick you with the shortfall.
Unless your contract has specific language providing a right to cancel, you are the owner of the car once you sign all of the documents. The dealer is under no obligation to take the car back if you change your mind, even if you choose not to drive the car off the lot.
A voluntary surrender will have a lasting impact on your overall financial health. You might still owe the lender money in the form of a deficiency balance. You'll want to pay off that balance in a timely manner so it doesn't go into collections. Your lender can report an unpaid deficiency balance to collections.
Renegotiate the Terms of the Loan. Refinance the Loan. Pay off the Loan. Consider a Voluntary Repossession.
A co-signer or co-borrower can request a release from a car loan, refinance the loan, pay off the loan or sell the vehicle to remove themselves from the loan agreement. It is important to communicate with the other borrower and come to an agreement on how to handle the loan before taking any action.
Car loans are secured debts, so the lender can repossess your vehicle if you stop making payments. A surrender is when you as the owner voluntarily gives the vehicle back to the lender when you file for insolvency proceedings.
If you can't afford your car payments, you can give the car back to your car loan lender in a "voluntary repossession." But think carefully before you do this—you might still owe the lender money.
Benefits of Voluntary Surrender for Consumers
It can result in lower fees and costs associated with the return of the vehicle, as opposed to the fees incurred during repossession. It may allow for more control over the return process and timing, reducing stress and embarrassment.
Voluntary return is just calling the finance department and telling them you're not going to pay. It just lets them know it's gonna be an easy repo...which brings us to... It's still repossession. They will sell the car at auction for pennies on the dollar and you will owe any remaining balance.
Legal Consequences
Depending upon why you chose to back out of the deal, you may be sued for breach of contract and request court to make you perform under the contract, although that is rare.
Buyer's remorse is a difficult feeling, but once the paperwork is signed, your ability to back out of a car purchase is very limited. Returning a car after the purchase is generally not an option, as most dealerships do not have a return policy once the sale is finalized.
Trade In or Sell Your Vehicle
If you need more than just short-term relief and refinancing isn't an option, it might be worth it to get rid of the car. You could either trade it in to a dealership or sell it to a private party and buy a used vehicle.
In some instances, a dealer may accept the return of a financed vehicle if it's necessary to avoid repossession. What's important to keep in mind here is that a vehicle's value depreciates quickly. Even after just a few months of ownership, you may owe more on the car than it's currently worth.
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.
The name makes it sound less severe, but a voluntary repossession is essentially the same as an involuntary one as far as your finances go. You'll still have to pay for the costs of the auction. You may still face a deficiency, a collection lawsuit, and wage garnishment.
Negotiate and finalize: You can negotiate with the dealer on the price of the new car, and on how much they will offer you for your trade-in. If the trade-in offer won't be enough to pay off your current loan, the dealer or lender may roll the difference into a new 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.
You Know the Online Prices and Can Do Better
The online prices can give you an idea of what a great deal looks like for the car you want to purchase. If you find that the car dealership won't match the prices you're seeing elsewhere, you can walk away and consider continuing your purchase online.
Refinancing the loan or selling the vehicle are two of the most commonly used ways to deal with negative equity. You may also consider trading in your vehicle for a different car, though that can lead to additional auto loan debt if you're rolling the original loan balance over.
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.
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.