Can i just return my car to the bank - i can't afford it?

Question

Can i just return my car to the bank - i can't afford it?

Answer 1

Understand that even if you do that, you still owe the money. You'll be paying for a car you can't drive. The bank will sell the car at an auction for a fraction of what it's worth and the lender will come after you for the difference. Plus, your credit will be trashed and you won't be able to get another loan for anything for 7-10 years. Why not just get a second job to earn the money to keep making your payments.

Answer 2

That's called a voluntary repossession.  You can do that.  They will sell it quickly, for a lower price, and then they will sue you for the difference between what they sold it for, and what you owe. They will win, and you will pay.

It is much better to sell the car yourself, because you maintain control of what you get out of the car.  You probably wouldn't sell it for $10,000 less than you owe, but the banks do that every day.

You will pay that difference, whatever it is.  You may think you can't pay it, but they'll teach you that you can.

Answer 3

I'm a Finance Manager with a large dealership and if you return your car to the bank it is going to be a voluntary repo. Which is very bad for your credit report. I'd advise you to try and sell it, maybe refinance it for a lower payment. Of course if you have gap insurance and the car was totalled it would be paid off in full.

Answer 4

Do anything but return the car. It's a bad move, in every way you look at it.

My guess is that you are upside down on your loan, meaning you owe more than the car is worth if you sold or traded it. If you sell it, you would have to come up with the extra money to pay off the loan so that you could get the title to give to your buyer.

If you traded, your negative equity would be rolled into your new loan making your payments even higher than they are now, even if you buy a cheaper car.

The absolute best option for you is to simply keep the car, and find some way to keep making payments. It's the cheapest, least problematic way.

Good luck. Glad to help.

Answer 5

Gotta love that gap insurance.... Yeah...he can sell a car with a lien on it.. It will probably take the help of somebody in his family to help him get a loan on the balance.  ie;  you owe 15,500.  you find a buyer for 10K.  you will still owe 5,500.  If a relative can cosign on a signature loan for the difference, the mortgage lender on the vehicle will release the title.  Suggestion... have a non-connected, 3rd party, get in touch with the bank after you tell the bank that you are going to voluntarily repo....and find out how much less they will release the title for.  The first thing you need to do though, is to go back to the dealership, and cancel the extended warranty, the credit life, and the disability insurance on the contract.  The dealership will send those funds to the bank to be applied towards the principle.  It will lower the amount of the payoff....it will NOT lower your payments.  They won't send those funds to you unless you personally had paid off the loan.  Be aware, that all 3 of those refunded amounts will be caluculated using the rule of 78's so you wont get back what you thought you would...however...it'll be something.  My guess is, had you not got slammed with 'em in the F&I office in the first place....you might just be able to make your payments on the vehicle.  Look in the envelope that the dealership gave you when you left that office.  That's where you will find out if you have any of those things on your contract.  Also, you may have purchased an additional insurance policy in that F&I office, called Gap Protection.  What this will do is pay the bank the difference between what your insurance company would pay the bank and what is really owed to the bank....after your vehicle becomes involved in an accident resulting in a "total" of your vehicle.  This amount of payment increase is usually substantial, but it's nice to have on your loan shold be involved in an accidental total.  Good Luck, whatever you do.

Answer 6

^^ He can't sell a car with a lien on it.

Answer 7

It's called a "voluntary repossession" and carries the same penalties as a regular repossession. Your credit's ruined, and you're still liable to pay the difference between what you owe and what the car brings at auction (so be prepared to cough up thousands). If you can't pay, they can get a judgment against you and start garnishing wages.

I'd do anything you can to avoid it. Call your lender and work something out immediately.