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keishamia
Posts: 2
Registered: ‎05-08-2009
0

Returning Financed Car to Dealer

I have a 2003 Audi A4 that I financed. I have $12,000 left in payments on the car. I would like to return the car to the dealer,  when at that time they auction it off. If (and I assume the won't in this market) they don't get $12,000 for the car, I must pay off the balance. That is fine with me, but she told me that will effect my credit. I have had some financial problems, and I renegotiated all my credit cards, and other debts. This is the last hold out. I know that my financial troubles has already affected my credit. Wouldn't this be the perfect time, since my credit is already damaged to do this? Also, how exactly does this damage my credit?

 

Please Help.

 

Sincerely

 

Keishamia

Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Returning Financed Car to Dealer

If you plan to pay the deficiency anyway, why not sell the car for the best price possible private party then pay the smaller deficiency?  Repo auctions are going to go for wholesale.

 

If you don't have the money to pay the difference upon a sale, then maybe you can arrange something through the finance company to allow  a "short sale" if possible.  Obviously the lender wants to recoup as much money as possible.  If they won't work with you and you can't sell it, then I guess you have no choice but the voluntary repo.

 

But, I would do everything possible to avoid this.  Sell things, have a garage sale, ebay and craigslist sale.  Get another part-time job.  It is never a "perfect time" to accumulate or complicate the derogatory credit issues.  The finance company is going to still come after you for the difference.  You might as well consider BK from the plan you are describing.  At least then you won't be chased for deficiencies, get sued, judgements, garnished wages.

 

But again, try to do what you can to limit the "damage" to your financial and credit portfolio.

 

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Valued Contributor
1111mel
Posts: 1,060
Registered: ‎02-13-2008

Re: Returning Financed Car to Dealer

That would be considered a resposession on your credit report.  It will tank your scores.

 

Take the advice from txjohn and try to sell it privately then pay off the difference.

 

Good Luck!

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Valued Contributor
usmc58555
Posts: 1,673
Registered: ‎02-18-2009

Re: Returning Financed Car to Dealer

they don't get $12,000 for the car, I must pay off the balance.

 

They will immediately demand payment in full and place the balance into collections.

 

I have had some financial problems, and I renegotiated all my credit cards, and other debts

 

Car loans are not credit cards. The only way you can "renegotiate" them is to refinance them.

 

This is the last hold out. I know that my financial troubles has already affected my credit. Wouldn't this be the perfect time, since my credit is already damaged to do this? Also, how exactly does this damage my credit?

 

They are not "holding out." They are loans that are simply not designed to be renegotiated. If you do not pay they repo and get what they can. That was what you signed up for.  A credit card has to work with a consumer as there is no vacation trip to vegas they can repo.

 

It will damage your credit in these ways:

 

-tank your score even more

 

-make it impossible to get a loan for a car for years

 

-make it difficult to get a car 5 years from now

 

-make it impossible for you to get financed by that same bank for another car


From your writing, it seems to me you think they should renegotiate with you, and that since your credit is damaged it does not matter if you pay them.

If you have renegotiated your other loans can you now swing your car payments or are you upset they will not lower your payment?

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Established Contributor
Takunda1
Posts: 512
Registered: ‎06-08-2007

Re: Returning Financed Car to Dealer


keishamia wrote:

I have a 2003 Audi A4 that I financed. I have $12,000 left in payments on the car. I would like to return the car to the dealer,  when at that time they auction it off. If (and I assume the won't in this market) they don't get $12,000 for the car, I must pay off the balance. That is fine with me, but she told me that will effect my credit. I have had some financial problems, and I renegotiated all my credit cards, and other debts. This is the last hold out. I know that my financial troubles has already affected my credit. Wouldn't this be the perfect time, since my credit is already damaged to do this? Also, how exactly does this damage my credit?

 

Please Help.

 

Sincerely

 

Keishamia


 

Also to add on what everyone has said. You credit will be affected by a Charge off of the deficiency balance, that will alos go on your credit. Furthermore, the financier has the right to sue you for the remainder of the balance, get a judgement against you and possibly garnish wages. I say, sell this vehicle to a private party ASAP, and try and get a personal loan for the deficiancy balance and pay the loan off.
Established Member
Lance66
Posts: 51
Registered: ‎07-01-2008

Re: Returning Financed Car to Dealer

I did this very thing once a long time ago.  I returned the car to the dealer

and then it sat on their back lot for 3 months until the finance company picked

it up.  They took it to auction and sold it for about $17K less than what was

owed on it.  Eventually, they did sick a collections agency on me to pay

the $17K.  That went on for several years.  I had already bought two other

cars before this was finally settled.. they took less money and I did eventually

pay them off and they changed the status on the debt on the credit report

to paid in full.  It will definitely be worse than you think it will be if you decide

to do it.  Be prepared.  Good luck to you.

New Visitor
keishamia
Posts: 2
Registered: ‎05-08-2009
0

Re: Returning Financed Car to Dealer

Thanks to everyone for all your help. My goal was always to pay it off. Right now, it needs repairs, and i am paying the car note on time, and the parking bills for it. I'm trying to lower my monthly bills. This voluntary repo does not sound like a good idea, from my research and listening to your reactions.

 

Once again, thank you to all.

 

Sincerely,

 

K

 

 

Established Contributor
Takunda1
Posts: 512
Registered: ‎06-08-2007
0

Re: Returning Financed Car to Dealer

PS: If you do decide to give the unit back, make sure to call your finance company everyday until they confirm that they have picked up the car. If you don't do that, it can sit at the dlr for months, while still accruing interest. Insist onthem picking up the vehicle in 3days. Better yet, I would make them pick it up from home, that way ther are no bogus claims of damages and extra fees.
Valued Member
WRodPSL
Posts: 33
Registered: ‎05-04-2008
0

Re: Returning Financed Car to Dealer

Private party sales can be complicated when there is still money owed on the vehicle. I owed 9k on my car and shopped it around to several dealers to see how much they would give me, without mentioning the lien on the car. I was lucky enough to find a dealer who was willing to pay 9k and he overnighted the check to my finance company a couple days later. He kept the car and I just called to make sure my finance company received the check. Of course I had signed documentation of the whole process.  That is what I recommend,  if you can afford to pay the difference on the spot between what you owe and what a dealer would give you.
Senior Contributor
MattH
Posts: 3,245
Registered: ‎04-03-2008

Re: Returning Financed Car to Dealer

[ Edited ]

keishamia wrote:

I have a 2003 Audi A4 that I financed. I have $12,000 left in payments on the car. I would like to return the car to the dealer,  when at that time they auction it off. If (and I assume the won't in this market) they don't get $12,000 for the car, I must pay off the balance. That is fine with me, but she told me that will effect my credit. I have had some financial problems, and I renegotiated all my credit cards, and other debts. This is the last hold out. I know that my financial troubles has already affected my credit. Wouldn't this be the perfect time, since my credit is already damaged to do this? Also, how exactly does this damage my credit?

 

Please Help.

 

Sincerely

 

Keishamia


 

My advice would be, first do not default on this loan, the consequences will be severe.  That car should last quite a while longer -- my own 2000 Camry still runs fine -- and almost without exception the car one has is usually the cheapest car available.  My Camry has reached the stage where about once a year it needs some major maintenance of around a thousand dollars, but that's a lot less per year than buying a newer car would cost!

 

So I would hang onto that car for at least four more years, and I would make extra principal payments on the loan in order to reduce the principal faster and get out from being upside-down on it.

 

Do you have GAP insurance?  If not, then first thing Monday morning you absolutely must call your insurance agent.  Without GAP insurance, if your car gets totaled and its value is less than the loan balance you will end up owing money on a car that no longer exists.

 

 

Message Edited by MattH on 05-09-2009 08:44 PM
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