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.