I am unable to continue to pay my car. Will My Credit History Be Affected?

Question

I bought two new cars last year, and they are under my name and credit history. Now I only able to cover for one car.

My question is if I report to the Fifth Third Bank (loaner) to tow it back, will it affect to my credit history?

Or will I have to find somebody take over the payment, then I won't be affect from that?

Thanks a lot for your input and advice.

Answer 1

Have you tried to re-fiance instead of ruining your credit.  You should contact the lender for your options.

Answer 2

Avoid repossession/voluntary surrender at all costs.

It will destroy your credit for 2 years, then merely terrorize it for another 5 years. They might sell it to collections. They might sue you for the remaining balance.

If you can find someone to take over payments, by all means do that instead. That won't hurt your credit at all. (on edit: assuming of course they put the car in their name)

If you can't find someone to take over payments, continue making payments until you can sell it and at least break even. If you are upside down in your payments, call your bank and see if they'll allow you to sell it for less than what you owe and give you an unsecured loan to cover the rest.

Answer 3

A voluntary repo is still a repo, and it's one of the Top 5 Worst Things That Will Trash Your Credit.

The bank doesn't want your car, they want cash.

Here's my advice:

SELL BOTH CARS.

Pay off the loans, and then buy yourself one or two $2,000 cars.

When you can afford to pay CASH for a new car, then you can buy one.

Answer 4

Where did you go to school or did you??  Go to the bank and ask them to hold off until you can sell that car they will charge you a little interest and that is O K.   If you let it go back it will ruin your credit.  Advertise it or put it in an area where it can be seen and put a sale sign on it... Sacrifice as little as possible.  YOU GOT YOURESLEF INTO THIS MESS NOW WORK IT OUT.... use your common sense!!!

Answer 5

Failure to pay off your loan by monthly payments or lump sum payment, effects your credit history.  Consider if you can trade one new car for an older used car for which you don't have to make any payments.  You can sell one car to any buyer and use the procedes to pay off your loan or perhaps resturcture your indebtedness for both cars.

Answer 6

Just sell the car for enough to pay it off.  Then you will be O.K. because if you default and have the car repossessed, you may still be liable for paying some on it anyhow and it will adversely affect your credit.  Good luck.

Answer 7

please try to find a person to take over the payments . otherwise your credit will take dependinf were you live . a five to seven year credit hit . better option dump both cars . find good used car . go back in a year start again . best of luck

Answer 8

As a bill collector for a major auto lender that's affiliated with 5/3, I deal with these questions on a daily basis.  Here's the 411:

Repoing the vehicle will negatively affect your credit, as the lender will have to recondition the vehicle and auction it off.  AND you are STILL LIABLE for the outstanding balance, AFTER the vehicle is auctioned.  If the company SETTLES on an amount less than the loan amount, the excess, if over $600, IS REPORTED TO THE IRS AS TAXABLE INCOME as well.  The BEST alternative is to add a third party to the account (someone to 'take up payments').  Your credit may still be affected, but not as drastically as repossession.  Other options would be to request a HARDSHIP AMENDMENT on your account.  This is typically done by extending the length of the loan by 6-18 months, thus lowering the payments by lengthening the terms of the contract.  You could also request to DEFER a payment, thus 'skipping' a month (or more) by having that payment(s) tacked onto the end of the loan.  This is commonly referred to as an 'interest only' payment.  If you're lucky, you may even find the lender has a MATCH PAY program, where you make a certain amount of payment each month, and the lender matches your payment dollar per dollar for a set time frame (usually 6 months max is what we do).  Hope this helps.

Answer 9

You need to keep making your payments if you do not want it to affect your credit history.  If you call the bank and tell them to take the car back, it will affect your credit.  You would be better off to sell the car and pay off the loan than let the bank take it back.

I would be careful about having someone take over the payment as you asked about.  If the loan stays in your name and they are just making payments and using the car, if they would stop making the payments, the bank will come after you.  Sell the car and make the new owner get their own loan.