Surrendering your vehicle and repossession are very similar in financial terms. You are unable to make the loan payments, so the lender is taking the vehicle back. The lender will resell the vehicle, and the proceeds will go toward the balance you still owe on the loan.

How can I return my car without hurting my credit?

How to Avoid Voluntary Surrender

1. Sell the vehicle. If your car is worth as much as or close to the balance on your account, selling it could enable you to pay off the loan without taking a hit to your credit.
2. Allow someone else to take over payments.
3. Refinance the loan.

What happens to my credit if I give my car back?

Credit Consequence According to credit reporting bureau Experian, if you give your car back to the lender, your credit report will list “voluntary surrender” next to the account along with any balance you still owe, because the value of your car wasn’t enough to cover your loan.

How does voluntarily surrendering a car affect your credit?

Voluntarily surrendering your vehicle will have a negative impact on your credit scores because it means that you did not fulfill the original loan agreement. When you voluntarily surrender your vehicle, the lender will sell the car to recover as much of the money owed as possible.

Can you sell a car without ruining your credit?

If your car is worth as much as or close to the balance on your account, selling it could enable you to pay off the loan without harming your credit. Even if the amount you sell it for doesn’t cover the full amount of the loan, you may be able to refinance the remaining balance, making your payments smaller and much more manageable.

What happens to my credit if I get a judgment on my car?

If a judgment is filed against you, this will also reduce your credit score. Because repossession and going to court are expensive for your lender, you might be able to negotiate an agreement so you can keep your car and your good credit.