Voluntary termination is a legal right (often under the Consumer Credit Act) to end a finance agreement—usually after paying 50% of the total amount—with no further payments, provided the vehicle is in good condition. Voluntary surrender is the act of handing back a vehicle before meeting that threshold, typically resulting in liability for the remaining balance.
Although you did not quite get to the point of involuntary repossession, your voluntary repossession might stay on your credit report for up to seven years. In addition to being visible on your credit report, a voluntary repossession can cause your credit score to drop dramatically, on average, by about 100 points.
A voluntary surrender will usually stay on your credit report for six years from the initial missed payment. Having a voluntary surrender in your credit history may make it harder to be accepted for other types of car finance, or another car finance loan.
Voluntary surrender is almost always better than a full repossession. The negative mark still appears on your credit report, but surrendering usually reduces fees, avoids the tow charges, and shows good faith. It can also make the process smoother and less stressful.
Voluntary termination of car finance can be a helpful option if you can no longer afford the monthly payments. However, you may still be required to pay any outstanding balance up to the 50% threshold, as well as any charges for excessive wear and tear.
You may owe money
After surrendering a vehicle, you could stop financing it but might still owe money to the lender. The new amount due is normally the difference between the outstanding loan balance and what the lender receives from selling the vehicle. This is called the “deficiency.”
A voluntary termination means that someone is leaving the company through their own choice. This could be because they've found a new job at another company, took up the option of a voluntary layoff, decided to retire or return to studies, or many other reasons. In short, it was the employee's choice.
Voluntary repossession means you contact your lender, tell them you can't afford the payments, and arrange to return the vehicle. It's different from involuntary repossession, where the lender sends a repo company to take your car without warning.
Reasons for Voluntary Termination (Employee Resignation)
How Negative Equity Works With a Trade-In. Some car dealers say you won't be responsible for the remaining balance on your old car loan when you trade in your old car. But that might not be true. Instead, some dealers just roll over the negative equity into your new car loan, so you still end up paying it.
Contrary to popular belief, opting for voluntary termination doesn't automatically damage your credit score. If you have met the necessary payment requirements, typically paying at least 50% of the total amount payable, and have no outstanding arrears, your credit score should remain unaffected.
A voluntary surrender is considered a negative mark on your credit profile because it indicates that you've failed to meet your obligation to repay your auto loan. As a result, it can lower your credit score.
For most people, increasing a credit score by 100 points in a month isn't going to happen. But if you pay your bills on time, eliminate your consumer debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.
Getting an 800 credit score in just 45 days is challenging, as significant scores usually take time, but you can make rapid progress by focusing on paying down credit card balances to lower utilization (under 30%, ideally under 10%), paying all bills on time, disputing errors on your credit report, and possibly becoming an authorized user on a trusted account, while avoiding new credit applications. The most impactful actions for quick changes involve reducing high balances and fixing mistakes, as payment history and utilization are key factors.
Having the right to voluntary termination can offer peace of mind if your circumstances change while you're in the middle of a finance agreement, or if your car no longer fits into your lifestyle. Voluntary termination applies to both Hire Purchase (HP) and Personal Contract Purchase (PCP) car finance.
If the information on your credit report is inaccurate, you may be able to get the voluntary repo off your report by disputing the error. But if the repo did happen, you have several choices. You can wait for the repo to fall off your report after seven years or negotiate a pay-to-delete agreement with your lender.
Voluntary Termination
Employees that have voluntarily left the company can be strong candidates for rehire, depending on what their status looked like when they left the job.
Examples of Voluntary Termination