cancel
Showing results for 
Search instead for 
Did you mean: 

How does a Voluntary surrender affect your credit score?

New Member

How does a Voluntary surrender affect your credit score?

My situation is a peculiar one. I have a car that was purchased brand new 1 year ago. Since that time it’s been in the shop for everything from steering wheel falling off to engine failures. I’ve tried to pursue the lemon law in my area but since it isn’t the exact same issue I’m having no luck with the case. The dealership offered a trade but i don’t want another car from that manufacturer. I’ve paid my note on time but i hate the car. I can’t trade it because after running
Auto check and seeing the repair orders in system people gave low balled me considerably leaving me with over 10K of negative equity. At this point the car is parked though I’m making payments because I’m afraid to drive it. I desperately want out of this car. Someone suggested voluntary repossession? Does anyone have experience on how this affects your credit ? Thanks
Message 1 of 9
8 REPLIES
Established Contributor

Re: How does a Voluntary surrender affect your credit score?

The effect on your credit will be the same regardless if it was voluntary or not.. The bank will pick up the car and take it to auction. They'll subtract what it sells for from what you owe, add on towing and storage fees, then send you the bill. At that point, the entire amount is due, no more payments. If you don't pay, or can't work out an arrangement, it goes to collections, or you're sued. If you're sued, you'll have to pay legal fees as well as part of the judgement. You can ask them to notate that it was a voluntary surrender, but it won't happen if they don't get something in return.

 

I worked for both HSBC and Chase auto. The only difference between the two was HSBC wanted the car back asap as sub-prime customers would be malicious and would destroy the car. Chase on the other hand, didn't want the car back as they knew they would more than likely lose money. .

 

Sad to say, but your only options are to 1) continue paying it, 2) trade it in and take a loss while rolling that negative equity into a new loan, 3) sue the dealership or manufacturer, or 4)file for bankruptcy.

 

Wish I had better news for you.

QS1 | $1.3k">

Message 2 of 9
New Member

Re: How does a Voluntary surrender affect your credit score?

It’s basically impossible credit/income wise to roll over that much negative equity. The car is worth about 8K, I owe 15 on it, I don’t have that kind of money to put down or borrow on it. I’ve tried reaching out to the dealership who’ve ignored me and the manufacturer despite having class action lawsuits/recalls for this same issue only offered me $1000 as “good will” payment. I’m spending $50 in transportation fees daily plus my carnote and insurance. I feel screwed over majorly and there’s no one to turn to for help out of this mess. I can get another car loan easily as I have pretty good credit but I’m at my wits end with this lemon.
Message 3 of 9
Super Contributor

Re: How does a Voluntary surrender affect your credit score?

IMHO the issue is not so much what happens to your credit but if you will be able to get a replacement car at a decent rate if you do turn it in.  Before you do turn it in, I would look into free help from local TV stations, legal aide or anyone else willing to help.  If you don't put too much miles on the car, you may be able to do a shorter term lease on the cheapest car possible and then focus on PIF'ing the older one.

06/23/2018: FICO 830 EQ 827 TU 824 EX
Message 4 of 9
Valued Contributor

Re: How does a Voluntary surrender affect your credit score?


@Lowoods1 wrote:
My situation is a peculiar one. I have a car that was purchased brand new 1 year ago. Since that time it’s been in the shop for everything from steering wheel falling off to engine failures. I’ve tried to pursue the lemon law in my area but since it isn’t the exact same issue I’m having no luck with the case. The dealership offered a trade but i don’t want another car from that manufacturer. I’ve paid my note on time but i hate the car. I can’t trade it because after running
Auto check and seeing the repair orders in system people gave low balled me considerably leaving me with over 10K of negative equity. At this point the car is parked though I’m making payments because I’m afraid to drive it. I desperately want out of this car. Someone suggested voluntary repossession? Does anyone have experience on how this affects your credit ? Thanks

As other's have stated, a voluntary surrender or reposession is in no way different than a regular reposession. It's just a term people like to use to make it sound less detrimental,  but it's not.

 

What state are you located in? If it's truly a new car, and only a year old, there is absolutely no reason you shouldn't be able to get these issues repaired under warranty . Most state's Lemon Laws apply to the total amount of time the car is out of service, as well as if the issue has to be repaired multiple times. For example, if a new vehicle in my state is out of service more than 30 days in the first year, no matter if the issues are the same or different, it's classified as a lemon. 

 

The dealership has no reason to help you, so they're not going to give you the best advice for the situaiton. Get a free consultation with a lawyer before talking to anyone else. 




Starting scores: 552 EQ, 570 TU, 558 EX Current scores (3/24/17): 739 EQ 735 TU 761 EX
Message 5 of 9
Community Leader
Legendary Contributor

Re: How does a Voluntary surrender affect your credit score?

Is the current loan reporting to the CRAs?

Message 6 of 9
Established Contributor

Re: How does a Voluntary surrender affect your credit score?

We had a lemon from suzuki- regular lemon laws were not helping us even though it spent a lot of its first year at the dealership- we hired a lawyer who didnt get paid unless we won- they used different federal laws to go after suzuki. We won. State laws for lemon law vary a LOT.
Message 7 of 9
Contributor

Re: How does a Voluntary surrender affect your credit score?

Do a Voluntatry surrender, then pay the remaining balance. Don't stop making payments as that would ruin your credit. But the Voluntary surrender would just be 1 derog., and won't be nearly as bad as missed payments and collections.

In the garden until July 2020



~~~~~FICO 8~~~~~July 2018~~~~~
Message 8 of 9
Established Contributor

Re: How does a Voluntary surrender affect your credit score?


@Lowoods1 wrote:
My situation is a peculiar one. I have a car that was purchased brand new 1 year ago. Since that time it’s been in the shop for everything from steering wheel falling off to engine failures. I’ve tried to pursue the lemon law in my area but since it isn’t the exact same issue I’m having no luck with the case. The dealership offered a trade but i don’t want another car from that manufacturer. I’ve paid my note on time but i hate the car. I can’t trade it because after running
Auto check and seeing the repair orders in system people gave low balled me considerably leaving me with over 10K of negative equity. At this point the car is parked though I’m making payments because I’m afraid to drive it. I desperately want out of this car. Someone suggested voluntary repossession? Does anyone have experience on how this affects your credit ? Thanks

I understand your feelings about cars from that manufacturer, @Lowoods1 ... But take your personal feelings out of it and look at it financially.   If the dealership does an even swap (takes your lemon car back and gives you another new or used car of comperable age, mileage and features), then you have a new car with no known issues that you can sell for top dollar.

 

As has been said, a repo is a repo, regardless of whether its voluntary or not.  There's a legal process they have to go through to get your name off the title, and that will show up on your credit report, period.

Venture: $18K | Amex ED: $18K | Amex BCE: $15K | NFCU CR: $15K | IT #1: $14.5K | Wells Fargo: $11K | Savor: 10K | Cap1 QS: $8.5K | Barclays Rewards: $7.75K | IT #2: $6.8K | MLife: $6.5K | Sportsman's Guide: $5.9K | NRA: $5.5K | Elan Plat: $2.3K | Cap1 PS: 2K | TRV: $2.5K | Cabela's: $1K


 


Current FICO 8 Scores: EQ: 728 | TU: 736 | EX: 726


Message 9 of 9