Here is the deal. I have a $535 per month car note. I can afford it, but I would love to get a lower payment so that I can pay some principle down on my home. The new car note would be $237 or less. Thats ~$298, approximately back in my pocket.
Should I take the $535 car back? I don’t know what will happen with my credit but I think another $298 is like an instant raise. So, please tell me, how would the repo affect my credit and provide your opinion on the matter.
Real Estate Professionals
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{ 4 comments… read them below or add one }
Don’t do it.
Repossessions are just about one of the worst things that can happen to your credit. Only thing worse is a bankruptcy.
Besides, if you let it go back, the lender will sell it at auction for less than it’s worth and come after you for the difference between what they sold it for and what you owe plus court cost, auction fees, towing fees and lawyer fees. This could easily amount to several thousand dollars.
They will take you to court and get a judgment and then they can garnish your wages, attach bank accounts and file liens on any other property you may own.
Add all of this to the fact that repo’s stay on your credit for 7-years and judgments can stay as long as 10-years and your credit will be trashed. All for $298.00 a month.
What you need to consider is selling the car yourself and then the amount you will have to come up with will be a lot less.
Any reposession will not look good on your credit report. Before considering a reposession, you may want to try to refinance it for a lower payment. You may want to try to sell it by having someone take over the payments. I would suggest selling it. You can afford the payments, so you don’t have to be in a hurry to sell. Try not to let it get reposessed. that will be bad for your credit and even though it is voluntary, it will still look bad. Your will spend time explaining why there is a repo on your credit history.
A voluntary repossession is the same as an involuntary repossession. They are equally as bad on your credit.
Some thing else to consider, is that when you get a repo (voluntary/involuntary), the car will be sold at auction and you will be responsible for any negative balance.
Ex. your car payoff is $10,000 and you allow a voluntary repo. The car would be sold at an auction. If the car only brings $5,000 at auction, you will be responsible for the remaining $5,000.
This is definately not worth it. Try getting a part time job or finding another means of taking care of this.
Good Luck
REPOSSESSION is what will show on your credit report. The word voluntary will not appear. After they sell the car at auction, you will still owe the difference between the sale price and the balance due PLUS repossession and sale fees. You are better off selling the car in a private sale and borrowing the difference. You will get more for the car and save the repossession costs.