Unfortunately, for many of the folks that call in from out of state, or walk in, a repossession is something to contend with.
Whether it is a function of the car simply not holding up to our expectations in terms of reliability and we can no longer afford to continue to pay the repair bills, or, it was a purchase that is no longer in our budget
If you are in the process of deciding whether give a car up (voluntary repossession), or there's literally a repo-man driving around looking for your auto, be aware of what will happen should the care or truck to back to the lender for sale or auction.
First, when we have a car repo'd whether it is voluntary or involuntary (there's not much of a difference), the lender will begin to assess charges. If it is an involuntary repo, there will be charges associated with the finding and transportation of the vehicle back to a lot. Often times, additional charges associated with the transportation of the vehicle to the repo lot, as well as charges associated with the auction and transaction of the vehicle.
Once the vehicle is auctioned off, usually for well less than the true value, that auction price of the vehicle will be subtracted from the amount owed on the loan, less the above mentioned fees.
What this means, is that usually, there will be a balance still owed on the loan. On your credit report, this will show as a 'past due' amount, or Charge Off amount. Additionally, the account will also be considered a derogatory tradeline. Which means moving forward, when you are in a better place and considering buying another vehicle or a house, that negative mark will show on your credit report and all future lenders will be aware that there was a Charge Off; Repossession in your history. Dealerships/Lenders will typically use this against you and charge you a higher interest rate.
The only difference between a voluntary and in-voluntary reposession are the fees associated with the pick up of vehicle. That is it. So, please, do not be fooled into thinking that if the dealership you originally bought the vehicle says... "just drop the vehicle off, we will take it back", this will not appear as a repo on your credit report. It will.
If you have any other questions, hit me up here, or call us @ 855-663-2733
Ed-Jack Dvorak is National Affiliate Liaison at Credit Dr., a national credit restoration company. He works with clients and creditors to improve credit profiles.