When to Voluntarily Surrender Your Car

Should I Surrender My Vehicle?

Deciding whether or not to turn in your car yourself is a tough decision. After all, it’s your vehicle, and it can cause a lot of stress not having transportation. However, if you’ve blown through all other options, a voluntary repossession could be your next best move.

Consider surrendering your car if you’ve already gone through the following steps:

1. Talk to your lender. What many borrowers don’t realize is that your auto lender probably doesn’t want to repo your vehicle. Defaults and repossessions cause stress for the lender, too, and everyone stands to lose in this situation. If you’re about to be behind on payments, or you’ve missed one already, call up your lender and let them know you’re struggling. They may be able to move your car payment due date or offer help in other ways.
2. Consider a deferment. If you’re current on payments but you know you’re about to hit some tough times financially, you may be able to defer your vehicle payments for a month or more. Deferred payments usually get added to the back end of your auto loan, so you still pay them later, but for a little while, you can take time to catch up or get through a financial bump. Talk to your lender as quickly as possible about a deferment plan – most don’t defer car loans if you’re already behind on payments.
3. Refinance the car loan. Most borrowers refinance their auto loans to lower their monthly payments. If you’re struggling to keep up with your car payments, you may be able to refinance to lower your loan payment and make things a little easier. Refinancing replaces your current auto loan with another one that has different terms. You can usually either extend your loan term or lower your interest rate (sometimes both). There are some requirements you must meet to refinance your loan, so act fast.
4. Sell the vehicle. If you can’t afford the car payments, can’t defer, and you don’t qualify for refinancing, then consider selling the vehicle and getting something more affordable. You should try to avoid a repossession on your credit report as much as possible, since it can really hinder your ability to get another auto loan for a while. Selling your car might be tough emotionally, but a repo and default can have harsh financial consequences.

If you’ve tried every step, including trying to sell your vehicle, it may be time for a voluntary repossession. It’s not something anyone wants to go through, but waiting for the repo company to take your car can cost you lots of cash. Surrendering your vehicle on your own terms has some cost-saving benefits.

How to Voluntarily Surrender Your Car

If you've come to the conclusion that giving your vehicle back to the dealership is the way to go, you can take a few simple steps to get it done. 

• Thoroughly clean the car. This means both inside and out. Remove all your possessions and give the car a good detailing. 
• Contact your lender and find out the process to begin surrendering your vehicle. You will likely need to bring your title with you if you live in a title-holding state. Otherwise, your lender can advise you on what you will need, if anything. 
• Take your car to the dealership you got it from, or an authorized dealership, if necessary. Once there, hand over the keys and any necessary paperwork. 

Voluntary Surrender Benefits vs. Repo

The biggest benefit is that you avoid repo charges associated with a recovery company. When a lender hires a company to recover and repossess your car, you're responsible for covering the bill. You’re also responsible for paying vehicle storage fees, which can stack up daily. By returning the car yourself, you can avoid paying for the recovery company and save some cash.

Another benefit of voluntarily surrendering your vehicle is that you get to return it on your own schedule. Besides losing your car, one of the biggest hassles of a repo is that the recovery company can take your vehicle pretty much anytime, anywhere – including off your private property. And if you try to “hide” your car, your lender can simply get a court order to seize the vehicle (so hiding it is a means to an end).

However, no matter which option you choose, there are similar consequences.

There’s going to be a repossession marked on your credit reports regardless of whether you return it on your own time or wait for the repo man. Repos stay on your credit reports for up to seven years – voluntary or not.

Your Next Vehicle After a Voluntary Surrender

Immediately after a repossession or a surrender, you’re likely to have issues getting approved for another auto loan for a while. Most lenders don’t approve borrowers with a repossession that’s less than a year old.

But there are dealerships that don’t check your credit: buy here pay here (BHPH) used car lots.

BHPH dealers use in-house financing, so they’re also your lender. When you apply for auto financing with a BHPH dealership, they’re not likely to review your credit reports. This means that your recent repo shouldn’t get in the way of getting another car loan. There are downsides to BHPH dealers, though.

These dealerships often come with high down payment requirements, sometimes around 20% of the vehicle’s selling price. Your interest rate is also likely to be higher than average. However, these downsides could be seen as the trade-off for the lack of a credit check.

Another option you have is paying cash for a car with a dealer or a private seller. Cash is king, and if you’re not borrowing money, you can skip over the credit check. Paying cash for a vehicle can be a hard thing to accomplish, but it’s not impossible if you can manage to save enough. Not having an auto loan can also free up your income each month and allow your credit reports to do some healing until you need another car.

Finding a Dealership With Bad Credit Options

If you can’t wait a year for your next vehicle, then you can start right now with us at Auto Credit Express.

We’ve built a nationwide network of dealerships that work with bad credit borrowers and those who’ve been through tough credit situations – including repossession. To get matched to a dealer in your area with bad credit lending options, complete our free auto loan request form!