How does a voluntary repossession affect my credit score?

I can't pay my car loan anymore. But instead of making the bank repo the vehicle, I'm going to give them the keys. How will this affect my credit score?

Answer
“It depends on whether you’re upside-down on the loan. When you surrender the vehicle, but the vehicle is worth more than the loan balance, you might see a small hit to your credit score, as your obligation to pay has been fulfilled.
In most cases, you can probably get more money by selling it yourself, paying off the loan, and keeping the remaining proceeds.
But if you still have a balance on the loan after the car has been sold, you’re responsible for paying it. In this case, you might be sent to collections, which generally results in about a 100-point drop in your credit score.
Since there’s little difference between a voluntary and involuntary repo, don’t rush to hand the car over. Instead, use the time to try to earn money to pay your delinquent monthly amounts.”
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Eric Schad
Answered on May 05, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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