What is a car loan charge-off?
I've never heard this term before. What does it mean for a borrower?
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Answered on Apr 07, 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.
“A car loan charge-off is a term used by lenders to describe uncollectible debt from borrowers. This usually means that the borrower hasn’t made any payments for an extended period of time (usually 120 days or more), and that the vehicle may also have a high likelihood of being repossessed.
If you’re a borrower who falls behind on payments or can no longer make payments, your credit score will suffer. Voluntarily surrendering your vehicle won’t lessen the impact on your credit score, but it might enable you to save face with the lender — which could have a positive influence on future dealings with the business. “
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