if you let a vehicle go back to the bank, will it affect your credit even though all payments havebeen on time

Question

Have been making steady payments for two years but need to get rid of car payment.

Answer 1

Auto finance is what I do for a living and a repossession is one of the worst things that you can have on your credit.

First of all the lender will sell the vehicle at auction for less then it's worth and you will be liable for the difference between what they sell it for and what you owed at the time of repossession plus all fees for storage, towing, reconditioning, interest and lawyers. This can amount to several thousand dollars.

If you do not pay, they can take you to court and get a judgment and at that point they can attach bank accounts, garnish wages (if your State allows it) and file liens on any other property you may own like cars, boats, land and homes.

All of this will show on your credit and it will be next to impossible to get any other type of loans without paying huge down payments, fees and State maximum interest rates.

Answer 2

this is called a voluntary reposession. it will read as such on a credit report. it will effect your credit but not as much as the lender taking it against your will.
a volutary repo shown on your credit will show future lenders that you took a loan for more then you could handle. this will effect a lenders decision to approve a loan in the future.
if you turn the vehicle back in they will attemt to sell the vehicle (usually for less then what you owe) that payment will be applyed to your remaining balance and you will still owe the difference.
selling the vehicle is good advice. this will not effect your credit as harshly as a reposession. depending on your lender, if you make a large payment (the sale of the vehicle) then it may be considered several payments in advance and you may not owe another payment for several months depending on the amount, if this be the case you can make small afforadable payments monthly toward the remaining balance.
also, this may actually help build your credit because the laon was paid off early.
however if paid off to early, it may be considered bad because you did not create a long enough history on the loan. i like to pay off loans after 50% of it has been paid toward monthly. meaning if it were a 5 year loan after 2 1/2 years i will work toward getting the loan paid in full. if you have had the loan for only 6 months for example, and the loan is 6 years long, paying it off this early may reflect your credit history. you will want to have a running balance for at least 6 more months, this is where the small afforable payments come into play.
everything i have said is my opinion haveing worked in finance for 3 years. i didnt not use any credible web sites to awnser this question

Answer 3

Of course it will! That's a repossession and having a recent repossession on your credit record will trash your credit record.

You'd be much better off tying to sell the car. If you come up short on the outstanding balance, see if you can take out a personal loan to top it up so that you can get clear title and sell it.

Answer 4

It will destroy your credit. A repo is one of the worst things on a report. Sell the car instead and pay off the loan.

Answer 5

Don't do it. It will destroy your credit. Not only will you still owe whatever is left on your loan, you will get charged repo fees...yes, even if you volunteer the repo. You'll also be charge the auction fees. It's really not worth it.

Answer 6

You'd be better off trying to sell the vehicle yourself, if you can sell it for the amount you owe on it.

Answer 7

sure it does. its a repo. they dont want the car they want the money they loaned ya.

Answer 8

what if you are on a fixed income