Vountary Surrender

[Anonymous]

I have a car that the blue book value is 5-7k and I owe $13,800. I have more that 3 years to pay on this car

with no warranty lefted on the vehicle...it's a chevy hhr. I have worked to improved my credit for the pass 3 years.

I want to just surrender my car...I want to know the down side of surrendering this vehicle I have gotten approved

for a 2009 Honda with 5 year warranty for less than my current payment.

How long will this stay with me?

[Anonymous]

Hi yobass.    Welcome to the forum.

Well, what you are referring to as "voluntary surrender" is a repossession.  The fact that they would not have to send a repo man out in the middle of the night does not change the name, nature or impact on your credit.

Your credit will be ruined.  Here is what will happen.

1.  If the vehicle is repo'd (even voluntary), it will go to "wholesale auction" meaning that they will sell it for less than what it would sell to a private party and even dealer trade-in.

2.  You will have a "repossession" and "charge off" for bad debt on your credit.  These will tank your scores so that you are unable to get any worth while credit.

4.  They probably will sell or assign the deficiency debt to a Collection Agency.  This will go on your credit as is one of the worst Credit Killers after Bankruptcy, judgements and liens.

5.  They very well could sue you for the deficiency.

6.  If they sue, they will get a judgement.  The judgement will go on your credit, in addition to the repossession and charge off.

7.  Public record judgements are almost as bad as bankruptcy.

8.  So, for this one item you can end up with: repossession, charge off, collection, judgement.

9.  With a judgement they can garnish your wages, which means contacting your employer and attaching your paycheck.

10.  This will all stay with you for 7.5 years.

If you just "have to" get a new car, try to roll the existing car in as a trade in with negative equity.  You are going to have to pay what you owe, regardless.   You didn't borrow a car, you borrowed money.  So the lender isn't going to accept the return of a car, they want return of all the money.

I recommend you drive the car and not get a new one, keep it maintained and make it last.  Or, sell the car and pay the difference out of pocket.  Or trade the car in and add the negative equity to your new loan.  But do NOT let it repo.  Honor the debt and your FICO and credit will honor you.  Ditch the debt and your credit is finished and you will pay dearly for it for many years to come, by not being able to get new credit and by any credit you do get it will be at much higher APR and lower amounts.

Pretty soon that shiny new 2009 car will be dull and negative equity too.  But then you won't have any credit to do anything about that.

[Anonymous]

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@Anonymous wrote:

I have a car that the blue book value is 5-7k and I owe $13,800. I have more that 3 years to pay on this car

with no warranty lefted on the vehicle...it's a chevy hhr. I have worked to improved my credit for the pass 3 years.

I want to just surrender my car...I want to know the down side of surrendering this vehicle I have gotten approved

for a 2009 Honda with 5 year warranty for less than my current payment.

How long will this stay with me?

---

Look, at some point you have to pay your bills.

 I can honestly and confidently say that 90% of the people reading this thread would have a much cheaper next car payment if they did not roll their negative equity into the new loan.

All the credit improvement in the world is not going to help if you voluntary surrender.

If you rolled the 7K negative into the new loan yes, your payment will go up 140.00 on the Honda.

is it you are upset that your HHR has negative equity or you are upset that the warranty expired? Both of those reasons were created by you.

If a lender is willing to finance you with a current auto line, and not ask that that be "closed" or traded, they will finance you with the negative equity.

If a lender is only willing to finance you if you retire your current auto line, the "surrender" damage will stop you from getting a loan.

Either way you need to accept the responsibility of your actions in regards to how you got into the situation with the HHR.

[TheRealT]

Yobass,

In 1997 I did this exact thing.  I voluntarily surrendered my new Chevy truck after a major financial disaster.  It hit my credit report as a REPO and tanked my scores for several years.

Many years later if finally fell off my report, but if I ever call GMAC for anything they hang up on me.  Additionally, the dealership where I turned in the car locally, will not sell me a vehicle regardless of my credit situation now.

If I had it to do over again, I would NOT have done it.

[Anonymous]

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@TheRealT wrote:

Yobass,

In 1997 I did this exact thing.  I voluntarily surrendered my new Chevy truck after a major financial disaster.  It hit my credit report as a REPO and tanked my scores for several years.

Many years later if finally fell off my report, but if I ever call GMAC for anything they hang up on me.  Additionally, the dealership where I turned in the car locally, will not sell me a vehicle regardless of my credit situation now.

If I had it to do over again, I would NOT have done it.

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I've never know anyone who looked back and said "best decision I ever made" when it came to some type of repo.  In fact quite the opposite, like TheRealT, all that I know wish they could do it different.

[llecs]

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TheRealT wrote:

Yobass,

In 1997 I did this exact thing.  I voluntarily surrendered my new Chevy truck after a major financial disaster.  It hit my credit report as a REPO and tanked my scores for several years.

Many years later if finally fell off my report, but if I ever call GMAC for anything they hang up on me.  Additionally, the dealership where I turned in the car locally, will not sell me a vehicle regardless of my credit situation now.

If I had it to do over again, I would NOT have done it.

---

Talk about being blacklisted! We are going to drive our minivan until it falls apart but are concerned about how other lenders will treat us after a repo from a few years ago.

[Anonymous]

Good reasoning here, drive it for 3 years and walk away. I sometimes wish I did not have a payment at all. I had a repo from 2002, even several years later, I got stuck with 18%, and felt like a king when I got my most recent loan at 9%. (still high). I have had thoughts of letting the car go just to get out of the obligation, it would be a big mistake. Maybe look into cutting spending elsewhere to pay more agressively on the loan.

[MattH]

I agree with everybody else: original poster should do whatever it takes to pay down that loan.  Many years ago when my wife and I were in very different financial circumstances than we are in today for a year or so I closed a gap in our budget by getting a part-time job delivering takeout sandwiches for these people.  It was near a campus so a lot of my customers were students; for some reason I found female students were much more reliable tippers than guys, I have no idea why.