Posts tagged ‘voluntary auto repossession’

Best options for voluntary auto reposition

Most car buyers utilize their credits to buy a brand new or a used car. They secure car loans to finance the vehicle purchase and in return they provide monthly payments. The monthly payments are paid until the last day of the loan term or until the borrowed amount is paid off. Failure to provide the monthly payments might result to repossession of the vehicle. However, there are cases where the buyer returns the car to the dealership or the lender commonly called as voluntary auto repossession upon knowing that they can no longer pay for the financing.

Hand over the vehicle

In the event that your financial condition has suddenly change and you know that paying for the payment of the loan would be impossible, you can voluntarily hand over the car back to the dealership or the lender. Although this would not erase the debt that you have with lenders, this will save them from repossession costs that would be eventually charged to you. As soon as you return the car, the creditor would automatically have the option whether to hold the car as a form of compensation or sell it to other buyers. However, the lender is obliged to inform you of what they are planning to do with the car and the law provides you with all the right for a fair sale.

Important warnings

Always bear in mind that voluntary repossession reduces the amount you owe from lenders but this doesn

Voluntary Auto Repossession

Have you done everything you can to avoid auto repossession, then you may want to consider a voluntary auto repossesion.

Voluntary auto repossession is a process that involves voluntarily returning a vehicle that you have purchased back to the dealership or bank. Many people choose to do this when their financial situation takes a turn for the worse and they are unable to make their car payments. It is important to note, however, that turning the vehicle in does not reflect well on a person’s credit report and also that it does not eliminate the borrower’s liability on the loan.

What typically happens in a voluntary auto repossession is that the dealership or bank will try to resell or auction the vehicle off. The amount of money made on the sale of the vehicle will be deducted from the amount still owed on the loan and the borrower will be responsible for the rest. This will still have a negative effect on the borrower’s credit rating and may still leave them owing quite a bit of money.

Before making the decision to voluntarily turn a vehicle in a person should call the bank and get the payoff amount on their loan. Then they should look at what the current blue book value for the vehicle is and what similar vehicles in their area are selling for. If it seems feasible to sell the vehicle for close to the loan payoff amount, the person would be much wiser to go that route as an early pay-off of the full amount of the loan will have a much better effect on their credit rating.

Other alternatives to voluntary car repossession include remortgaging a home to consolidate date and reduce the total monthly financial obligation. This may be a wise choice for many people when their income is reduced and/or their debt has become too great. Of course, if there is no other viable option, a voluntary car repossession and subsequently filing a bankruptcy may be the only way out of the debt, but it is important to remember that while you may no longer owe the money the consequences of this choice will last for many years to come.