{"id":16627,"date":"2021-11-09T11:36:00","date_gmt":"2021-11-09T17:36:00","guid":{"rendered":"https:\/\/www.lexingtonlaw.com\/blog\/?p=16627"},"modified":"2025-05-14T16:25:21","modified_gmt":"2025-05-14T22:25:21","slug":"voluntary-repossession","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/credit-101\/voluntary-repossession.html","title":{"rendered":"How Bad Does A Voluntary Repo Affect You?"},"content":{"rendered":"\n
\"Handing<\/figure>\n\n\n\n
\n

Voluntary repossession will likely cause serious consequences for your credit, including a lower credit score and negative items on your credit report.<\/h2>\n<\/div>\n\n\n\n

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. <\/em>See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

Voluntary repossession\u2014also called voluntary surrender\u2014will prevent your car from being seized by the lender if you can no longer pay for the vehicle. However, even though you\u2019ll avoid the emotional turmoil of having your car seized, you\u2019ll likely still face serious consequences for your credit, including a lower credit score and negative items on your credit report. <\/p>\n\n\n\n

Often, there are better options than voluntary repossession, so communicate with the lender to see if you can reach a settlement or sales agreement. <\/p>\n\n\n\n

When you take out an auto loan, the car belongs to the lender until you\u2019ve finished paying it off. If you stop making payments for a period of time\u2014usually around three months\u2014your loan may be considered in default, and the lender will attempt to repossess the car from you. <\/p>\n\n\n\n

While some people suggest that you may gain the favor of your lender by turning over the car voluntarily, it\u2019s unlikely to have any positive effect on your credit. <\/p>\n\n\n\n

Read on to learn more about how voluntary repossession works, what voluntary surrender does to your credit and what options you have when you\u2019re facing repossession. <\/p>\n\n\n\n

How voluntary repossession works<\/h2>\n\n\n\n

Voluntary repossession or surrender enables you to turn your car over to a lender rather than having it taken from you. <\/p>\n\n\n\n

Repossession can be an emotionally difficult experience, especially since the lender can take your car at any time or location\u2014even without providing a warning.<\/p>\n\n\n\n

After the lender receives your car, they will sell it to recoup some of their losses. That said, you may still have a balance after the sale of your vehicle\u2014since cars are depreciating assets, they usually aren\u2019t worth as much as their loan. For instance, if your car sells for $9,000 but your outstanding loan is $16,000, you\u2019ll still owe the lender $7,000, even though the car was already taken away. <\/p>\n\n\n\n

Voluntarily giving up your car can spare you the emotional burden of repossession, but it likely won\u2019t have much positive effect on your credit, since a number of negative items will have already accrued on your report by the time repossession is imminent. <\/p>\n\n\n\n

How voluntary repossession affects your credit<\/h2>\n\n\n\n

All repossessions\u2014voluntary or not\u2014have a significant effect on your credit report, though it is possible to recover over time. <\/p>\n\n\n\n

Typically, there are three main negative marks that you may accrue on your credit report when you are forced to give up your car: late payments, repossession and collections.<\/p>\n\n\n\n

\"Three<\/figure>\n\n\n\n

Here\u2019s how each of those negative items affects your credit score:<\/p>\n\n\n\n