How bad is it to Return a car to the agency

Question

I am currently paying on a car and still owe a lot money on it. I have been making payments on it for almost 3 years now and I recently came across a good deal on a car that I can buy cash. I was hoping someone could tell me how bad it would look if I returned my car to the agency. Any advice will be greatly appreciated.

Answer 1

Let's say you owe $10K on the loan and the car is worth $5k.

You turn it back into the car agency and they finally manage to sell it for $3K.

The agency will sue you for $7K.

The agency will report that you didn't pay them on your credit history.

Even if they cancel the debt (which they may not do for 7 years), the cancelled debt will be income for income tax purposes.

Answer 2

Bad idea...it will simply ruin your credit for the next 5- 7 years.  Why not just sell your current car (craig's list or ebay) and buy the one you want.  If you are afraid the car will be sold, give the seller a deposit, or take a second loan to buy the new one, sell the old one and pay off the first loan.

It takes more effort but, in the long run it will pay off.

all the best,  scot

Answer 3

It will show as a repossession on your credit and taking it back verse letting them come and get it makes no difference a repo is a repo is a repo.

The lender will sell the vehicle at auction for less then it's worth and come after you for the balance plus all fees for the repossession, storage, reconditioning, auction, interest and any thing else they can think of this will amount to several thousand dollars and if you do not pay they can take you to court, get a judgment and at that point 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 for the next 7-years making it very hard to get any other types of loans without making massive down payments, paying huge fees and State maximum interest rates.

You would be much better off to sell the vehicle and take out a loan for the difference this way you can salvage your credit.

Answer 4

If you just hand your car over to whoever it is financed with it will count as a repo and completely destroy your credit rating.  The 3 years you paid for it on time will mean absolutely nothing once it is categorized as a defaulted loan.  That will remain on your credit report for 7 years and can prevent you from getting other loans (including a mortgage) in the future.

Your best bet is to sell the car you have for as much as you can, pay off the balance (if possible) and if not, pay off as much of the balance as you can and refinance the remainder for a lower interest rate.  Grit your teeth and pay it off.  Otherwise, you'll be in a sticky situation.

Answer 5

it is a voluntary repo on your credit and when they resell it if any balance is owed you will be responsible for any way. Why not sell the car for the payoff and then buy the one you want