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If you are behind on your car payment and cannot catch up, you can return your car to your lender. Lenders call this voluntary repossession, and it can potentially give you some financial breathing room. But before you hand over your car to the bank, you should consider all the possible consequences. To learn more about voluntary repossession in Florida, contact an expertCar seizure lawyertoday at Loan Advokat.
Can Voluntary Repossession Affect Your Credit?
One reason many people consider voluntary repossession is to protect their credit scores. Unfortunately, giving your car to your lender is unlikely to protect your credit. Many lenders consider a voluntary repossession as an involuntary repossession, which will result in a negative mark on your credit report.
How much does a voluntary repossession affect your credit?
Estimates vary, but you can expect a voluntary repossession to drop your credit score by 50-150 points. How much of a drop you'll see depends on factors such as your past credit history and the number of payments you made before the repossession. A major drop in your credit score can seriously affect your ability to get future loans for a car, home or other major purchases. Some lenders may not give you credit after your score drops, or you may have to accept a high-interest loan.
How long will a voluntary repossession remain on your credit?
According toExperian, one of the three largest credit reporting agencies, a voluntary repossession is considered a default on a loan. Defaulting on loans results in derogatory marks on your credit report that can last up to seven years. You may be able to remove a derogatory flag from your credit report by paying the balance you owe on your loan or entering into an agreement with your lender.
Advantages and disadvantages of voluntary takeover
There are pros and cons to turning your car over to your lender if you're behind on your payments. The benefits of voluntary readmission include:
- A better takeback experience—Involuntary seizures upset many people because they often occur at inopportune times. A voluntary impound allows you to choose when to return your car, giving you time to make plans.
- Lower seizure costs—If a lender repossesses your car, you may owe additional fees on top of your loan balance. If you voluntarily surrender your car, you will not have to pay any impound costs.
- Less stress for you—For better or for worse, if you transfer your car to your lender, you won't have to worry about the car anymore. You may still owe a balance and have other things to worry about. But you don't have to worry about maintaining your car or when the bank will take it.
Some negative effects of voluntary car confiscation include:
- Lower credit score—You'll likely see your credit score drop after you give your car to your lender, which could affect your financial future.
- You may still owe a balance on your loan—You may even have to pay your lender back after you give them your car, although typically just the remaining balance won't be covered by the car's resale. An outstanding loan balance can cause significant financial stress.
- You no longer have your car—There may be ways to get to your destination after you return your car. But these options are probably less convenient than driving yourself.
Talk to an experienced Florida car repossession attorney today
OfDefense Attorney for Florida, debt lawyer andFlorida Bankruptcy Lawyersat Låneadvokater can help you decide whether you should voluntarily confiscate your car. We protect your rights and help you find the best way out of this challenging situation. Call us today or visit our contact page for a free consultation.
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Loan Lawyers is made up of experienced consumer rights attorneys who use all available resources to develop comprehensive debt settlement strategies. Our goal is to shoulder these burdens, solve these problems, and let our customers sleep easy knowing they are on their way to a better future.
