A voluntary repossession can remain on your credit reports for up to seven years, which is also the same amount of time an “involuntary” repo remains. However, a voluntary repo can still have benefits long-term and could mean less headache for you in the future.

Impact of Repossession on Your Credit

Repossession, voluntary or not, sticks around for up to seven years, and it can drastically lower your credit score. The exact loss of points is dependent on your current credit history and score, but you could lose around 100 points or more after a repo is reported.

One of the harshest side effects of having a recent repossession on your credit reports is that most subprime and traditional auto lenders typically don’t approve you for financing for up to 12 months after it's reported. After a year has passed, your lending opportunities start to open back up again, provided you haven’t had any other major delinquencies reported.

The good news is all things on your credit reports lose some of their potency over time. With each passing year, that repossession has less impact on your overall credit score.

But, if a voluntary repo sticks around for the same amount of time as a traditional repossession, why not just wait for the repo man and keep the car as long as possible?

Benefits of a Voluntary Repossession

How Long Does a Voluntary Repossession Stay on My Credit Reports?There are four main benefits to surrendering your car compared to waiting for the recovery company to tow it away:

  1. Control – A voluntary repossession gives you control. You can notify your lender that you’re voluntarily returning the vehicle to the dealership, remove your repossessions, and plan your next steps on your own time.
  2. Convenience – If you wait for the recovery company to pick up your car, they could come pretty much anytime or anywhere: your workplace, your home, or even while you’re out shopping. If the recovery company picks up your vehicle with your personal belongings in it, you must find a time to go to where the vehicle is being stored and recover your possessions, since they aren’t obligated to send them to you.
  3. Save money – Another benefit to surrendering your car yourself is that you don’t have to pay the lender the recovery company fees. When a lender hires a repo company, you’re responsible for paying the bill. If you skip this step, it’s one less fee to worry about.
  4. Looks better – When it comes to your future credit opportunities, a voluntary repossession can look better to future auto lenders than a traditional one. It could be viewed as accepting the fact that you could no longer keep the car, and instead of waiting for a repo company to come, you took control over the situation instead of dragging out the process.

What Are My Auto Loan Options After Repossession?

As we mentioned earlier, most auto lenders don’t consider borrowers financing if they have a repossession that’s less than a year old. However, there are dealerships that may be willing to work with you.

Buy here pay here (BHPH) dealership may skip the credit check, meaning your recent repo wouldn’t impact your eligibility for a car loan. Often, the biggest factors in a BHPH dealer’s eyes are your income, identity, and down payment size.

BHPH dealers use in-house financing, so they handle all car buying and financing themselves. In terms of vehicle options, used cars are what you’re limited to.

You may be wondering what the “catch” is with a dealer that doesn’t check your credit – and you’d be right to wonder it. Auto lenders check credit scores to see your borrowing history and use it to assign your interest rates on loans.

BHPH dealers that skip the credit check typically assign higher than average interest rates to make up for the fact that they don’t examine your credit history or score. You may also have to plan for a 20% down payment at a BHPH dealership, which is another way to make up for the lack of a credit check.

While BHPH dealerships can have some downsides, if you can’t afford to purchase a vehicle with cash, these dealers could be your answer to a car while you wait for the repossession to loosen its grip on your credit score.

Before You Surrender…

If you’re on the fringe of voluntarily surrendering your car, we recommend calling your auto lender. Believe it or not, lenders typically want to avoid repossession as well. Some lenders offer deferment programs or opportunities to cure the car loan. Contact your lender before you return your car to see if there is another path, and the sooner you act, the better your chances are for getting a favorable outcome.

If your lender can’t help, and you don’t want the vehicle anymore, it may be time to trade it in for something else. And if you’re worried about poor credit getting in the way of your auto loan opportunities, then work with us at Auto Credit Express. We’ve cultivated a nationwide network of special finance dealerships that assist borrowers in many tough credit situations, and we want to help you, too.

Fill out our free auto loan request form, and we’ll look for a local dealer that’s equipped to handle bad credit. There’s never a fee or obligation, so get started right away.