Feb
25
what is the difference, if any, between repossession and surrendering my car? how does this affect my credit?
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I am moving to Hawaii and it will cost so much money to have it shipped there. I am thinking about surrendering my car back to the bank, which financed the car loan. Is this the same as repossession? How would this affect my credit? I just got the car last year.
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6 Comments
February 27th, 2009 at 10:40 am
yes it is. the only difference is that it’s a voluntary repo vs. a forced repo. in the eyes of the bank and your credit, there is no difference. your credit would take a significant hit if you did this. you could also be held accountable for the shortage when the car is sold. they could take you to court for that and obtain a deficiency judgement. better think twice before you go forward with this plan…because it won’t be the “no consequence” plan that you think that it might be.
March 1st, 2009 at 4:49 am
Auto finance is what I do for a living and let me explain what will happen.
There is no difference a repo is a repo is a repo.
First your lender will sell the vehicle at auction for far less then it’s worth and then come after you for the difference plus all fees for towing, storage, reconditioning, interest, lawyers, auction and anything else they can think of.
This will amount to several thousand dollars and if you don’t pay they will take you to court and get a judgment, at this point they can attach bank accounts, garnish wages (if your State allows it) and file liens on any other property you may own like cars, boats, land and homes.
All of this will show on your credit for the next 7-years making it very hard to get any other type of loan without making massive down payments, paying huge fees and State maximum interest rates.
And as far as your credit goes you can look for a lose of between 100-150 points as soon as the repossession hits.
You would be much better off to sell the vehicle and take out a loan for the difference your payments would go down and you would save your credit.
March 2nd, 2009 at 8:56 am
The bank will want to call it a “voluntary reposession” but the credit bureaus will show it as just a reposession. My husband did this with a car loan nearly 10 years ago. It took me 5 years after I found out about it (he did it before we met) to help him rebuild his credit. Ironic part is, now his credit score is higher than mine!
March 5th, 2009 at 8:46 pm
The amount of money you would have to pay and the damage to your credit would probably be worse than the shipping charges.
Regardless whether it’s voluntary or forced repossession, it’s a repossession and you will owe the difference between what you owe on the car and what they can get for it at auction (plus any admin fees and the cost to have the car repossessed). Until you pay off this deficit, you will have a non-payment of debt on your credit, which will not come off until 7 years after you pay off the debt.
Besides, you will need a car when you’re in Hawaii. And, to buy one there is more expensive than the mainland, because of the cost someone else had to pay to get it over there. And, with that hit on your credit, you wouldn’t be able to buy another one on credit, anyway.
March 7th, 2009 at 1:02 pm
Pretty much the same bad effect on credit. They will sell the car at auction and then hold you responsible for the rest. I guarantee “the rest” is going to be more than the shipping cost, not to mention the bad credit that will end up killing you on future loans.
Better off ******* it up and shipping it. You’ll need a car there anyway as the transportation system ***** there. Used cars there are rusted junk, too.
Get lots of quotes on shipping. There are sites you can put in the job for bids as well as contacting directly. My last shipped from HI to GA was $900.
March 7th, 2009 at 6:09 pm
It’s best to get the right procedure from your bank before doing anything yet, find out which is the best opportunity.
They will have some options that you can use.