Voluntary repossession, or also known as voluntary surrender, is when a borrower gives up their car to the lender before the lender has to repossess it. This can happen if the borrower is unable to make their payments and wants to avoid the negative consequences of involuntary repossession.

Voluntary repossession is generally seen as a better option than involuntary repossession because it allows the borrower to have more control over the situation. The borrower can choose when and where they return the car, and they can avoid the embarrassment of having their car repossessed in front of their neighbors.

Voluntary repossession can be an effective way of dealing with a delinquent loan, whether it be for a car, motorhome, boat, or any other asset. It allows you to actively take steps toward minimizing future expenses when you find that you are financially stretched too thin. However, keep in mind that a voluntary repossession will hurt your credit. It will stay on the borrower’s credit report for seven years, and it will make it more difficult to get approved for a loan in the future.

If a borrower is considering voluntary repossession, it is important to weigh the pros and cons carefully. It is also important to talk to the lender about their options. The lender may be willing to work with the borrower to find a solution that is better for both of them.

Here are some of the pros and cons of voluntary repossession:

Pros:

• You have more control over the situation.
• You can avoid the embarrassment of having your car repossessed in front of your neighbors.
• You may be able to negotiate a better deal with the lender.

Cons:

• It will still have a negative impact on your credit score.
• It will make it more difficult to get approved for a loan in the future.
• You may have to pay additional fees, such as repo fees.

If you are considering voluntary repossession, it is important to weigh the pros and cons carefully. It is also important to talk to the lender about your options. The lender may be willing to work with you to find a solution that is better for both of you.

What to Expect In a Voluntary Repossession

After contacting the lender, borrowers will discuss the arrangements for returning the asset, such as where and when the exchange will take place and what documents are needed.

It is important to remember that voluntary repossession does not relieve borrowers of their debt obligation. Although returning the vehicle takes away one more expense from their monthly budget, borrowers could still be responsible for legal fees and any remaining balance left on the loan after reimbursement.

When a car is subject to voluntary repossession, the sale of the vehicle goes toward settling the loan. Though this helps reduce the loan balance, borrowers may still be left with a debt to repay and without a reliable means of transport. Additionally, lenders may well include extra costs from the sale in their calculations, which will be added to the remaining amount owed.

How Voluntary Repossession Can Affect Your Credit

Voluntarily repossessing a car can have an immediate and long-term impact on a person’s credit score, depending on how the lender reports the debt to the credit bureaus.

Depending on the severity of the default, scores may plummet as much as 100 points after a voluntary repo; however, it can also be reported as a voluntary surrender, which looks better than other forms of repossession. The effects of repayment delinquency and voluntary surrender will stay on a consumer’s credit report for seven years, but its influence may weaken with good debt management over time.

It is important for consumers to understand how their actions can affect their credit so that they are better prepared if they need to repossess an asset, such as a car loan. Loans will be considered delinquent until the bank receives the asset.

How To Avoid Voluntary Repossession

When it comes to making car loan payments, you have more options than you might think. There are a number of alternatives available to you that might help you avoid voluntary repossession.

Before you decide to surrender your asset, try talking with your lender about adjusting the payment plan and terms so that they are more manageable for you.

Refinancing the loan is another viable option. This could result in a lower interest rate and extended repayment period, setting your monthly payments at an amount you can handle.

Lastly, consider selling your car entirely to pay off the loan (or most of it). From there, seek out a vehicle that fits better into your budget.

Remember, you have options! So, consider them before deciding on voluntary repossession.

What Is Our Role in Voluntary Repossessions?

Life happens. When someone finds themselves in a position where they can no longer afford their loan payment, whether it be on a car, motorcycle, boat, or any other asset, their first instinct is to contact their lender to set up a voluntary repossession.

From there, they will be faced with a couple of options. In some cases, the consumer will return the asset to the lender directly. While that option may be convenient for the consumer, it’s not always convenient for the lender because it’s not uncommon for there to be miscommunication along the way. Keys handed over get lost, or personal belongings are left behind with the asset. The frontline employees that physically take possession of the returned asset don’t always know what is going on or how they’re supposed to handle everything. In short, it can be a headache for the lender.

The second, and much easier option for all parties involved, is for the lender to call an asset recovery company (aka a repo company) like us. We handle the asset recovery to ensure the smoothest voluntary repossession for everyone involved. Our professionals know exactly what questions to ask when contacting a borrower, making voluntary repossession as convenient as possible. We make all the arrangements to secure the asset and to verify the status of the repossession with the borrower as well as the lender.

For example, we confirm that the consumer has removed any of their personal belongings. We make sure that the vehicle is drivable, and we get an update on any damage there might be to the asset. We also set up a time and location that we can come and get the asset. Finally, we ensure the safe and secure delivery of the asset to the lender. And if necessary, we can also securely store the asset for the lender.

Voluntary repossessions are nothing new to us. We have the experience to ensure a smooth voluntary repossession for borrowers and the lenders in Montana, Wyoming or in any of the primary states we serve in the Pacific Northwest. Contact us to learn more about our services and how we can help!