All About Voluntary Repossession

All About Voluntary Repossession

What is the difference between a voluntary repossession and one where the vehicle is snatched by a repossession person from the auto or home lender?

What is the meaning of a voluntary repossession? Also, which affects your credit report more; a voluntary repo or a regular repo?  And, is voluntary repossession only for autos or are there home voluntary repossessions too?

  • Learn the differences between a voluntary repossession and standard repossession.
  • Understand your responsibilities regarding a deficiency balance you will owe.
  • Get help with your debt if you cannot manage the debt payoff on your own.

Repossession is where a creditor holding the title to the property takes possession of the property from the debtor. It is typically related to an automobile repossession but can also apply to any asset, and there is such a thing as a voluntary house repossession.

What is Voluntary Repossession?

"Voluntary repossession" is a term used to describe a situation in which a consumer voluntarily surrenders the property securing a loan, such as an automobile, to the lender that financed the purchase. Voluntary repossessions generally occur when a consumer has fallen behind on their loan payments and decides to surrender the property rather than forcing the creditor to proceed with repossession. Voluntary repossessions occur most frequently with vehicles but can occur with any type of secured loan, such as the purchase of work equipment, jewelry, etc.

One of the most common consequences of a voluntary repossession is that the sale of the vehicle does not cover your debt. It is critical that you deal with any outstanding debt.

Now, on to your questions about voluntary repossession. To voluntarily surrender your automobile or other property to the lender that financed its purchase, you would first need to contact the creditor to explain the fact that you can no longer afford your monthly payments and that you wish to surrender the property. At that point, the lender will likely provide you with a location at which you can safely turn over the property and tell you any details you need to know about its procedures for processing voluntary repossessions.

Do not be surprised if your creditor is resistant to your request to voluntarily surrender your vehicle; the lender will likely try to work with you to figure out a way for you to keep the loan current and retain the property. These efforts may actually help you in figuring out a way to maintain the loan. However, if you are sure that you cannot afford the loan payments, voluntarily surrendering your vehicle can be a reasonable choice.

How does a voluntary repossession compare to a standard repossession?

In regard to your credit, both a voluntary repossession and a standard repossession have the same effect on your credit rating. They will both appear as repossessions and will both result in a significant negative mark on your credit history. Under the FCRA, a repossession will appear on a credit report for 7 years from the date of first delinquency. You will likely see your credit score drop substantially, as having a repossession in your credit history marks you as a credit risk.

However, if you truly cannot afford your car payments and are falling behind, it is likely that your vehicle will be forcefully repossessed if you do not take the initiative to surrender it first. The primary benefit of a voluntary repossession is that the costs associated with the process tend to be significantly less than those associated with a forced repossession, which could save you a lot of money as you work to pay off the remaining balance of the debt.

Deficiency Balance

Even if you surrender your vehicle to your lender voluntarily, the lender has the legal right to collect any balance remaining on the debt after the car is sold at auction. This type of debt is referred to as a "deficiency balance." The creditor may even file a lawsuit against you to collect on the unpaid deficiency balance. You should, therefore only proceed with a voluntary repossession if you truly cannot afford the loan, as you will likely still owe the lender a significant amount of money, even after you no longer have the use and benefit of the property.

A deficiency balance is an unsecured debt, which the law treats the same as credit card debt, a payday loan, or medical debt, among other consumer debts. To see your rights and options for resolving the deficiency balance, read "Collections Advice."

For more information about credit and credit scoring, I encourage you to visit the credit help page. In addition, offers a wealth of information for consumers struggling with their debts, available on the debt help page.

I wish you the best of luck in resolving your financial difficulties.

I hope this information helps you Find. Learn & Save.Best,



DDawn, May, 2021

A young person purchased a vehicle via a dealership. The young man was uneasy because no one went with him to purchase this vehicle. The young man made it clear that he needed a payment on the lower side of things. The people at the dealership talked him into purchasing a vehicle with a pricier monthly payment. Looking at the price of insurance and the vehicle payment and not being able to pay the sales tax right away made it clear to the young man that the vehicle was going to be to much when he started school. He spoke with the dealership in hopes to get a cheaper help. He spoke with the loan company, again no help. He asked them about a voluntary repo....told that it was a bad decision but given no help, he had no choice. It brought the vehicle back to the dealership. Now they say that he must pay the sales tax at the revenue office....this was all within 30 days. What can be done?

JJoshua Abreu-Rosa, Aug, 2021

Hello Dawn,

Thank you for reaching out to us. We are sorry to hear about your friend. Everyone's debt is different, so the first step is figuring out what might be the best solution for them. Our affiliates Freedom Debt Relief can review your friend's situation and look into options to help him make an informed decision. Please have your friend call Freedom at 800-852-1431.

Regards, Josh

TTerri, Mar, 2021

I want to voluntarily surrender my vehicle but it doesn't run/can't move, the seller wants me to have it towed 100 miles away. I feel like this is wrong, I can't afford my payments what makes the seller think I can afford to have it towed?

JJoshua Abreu-Rosa, Aug, 2021

Hello Terri, 

Thank you for reaching out to us. What expenses are you dealing with that is causing you to defer on your car payments?

Maybe you can still own your car, maintain payments, and address your other expenses. 

Please let us know so we can find options that can help you. 

Regards, Josh 

ssam, Jan, 2021

I have three cars on my credit 1 a co-sign, 2 under my name. I wanted to do a voluntary repo on 1 of the cars under my name but will it still hurt my credit as much since the other two cars never missed any payments? im sure it will do something to my credit but will it hurt me as much as it would if i only had one car and was giving it up?

JJoshua Abreu-Rosa, Aug, 2021

Hello Sam. 

Thank you for reaching out. Please, do not take my answer to be legal advice as I am not an attorney. Only attorneys can offer legal advice. 

In my research, I learned that the Fico score is weighted heavily on payment history. The impacted value is 35% of your score and is a major factor in its calculation. The reason is that a lot of research from observers of credit transaction show your track record will influence the likelihood that you'll pay all debts as agreed. 

Whether you have one car or multiple these items will stay at least for seven years and if you do not have cash flow your record will heavily dictate your APR when financing. 

Try to maintain your payments. Cut cost, that may be a lot harder than said. However, a lot of successful companies had to cut costs before they became empires. 

If you need anything else please let us know. 

Regards, Josh 

JJames, Aug, 2020

I have a car that the car dealer won't come and get but now it's on my credit. What can I do with the car?

DDaniel Cohen, Aug, 2020

James, does the car run? Is it registered and insured? If yes, then keep using the car. I don't think you can make them come and get it. I don't know what would happen if you drove it onto their lot and left it there. Perhaps you should to speak with a lawyer see. 

The other two issues on your plate are the credit report issue you raised and the debt that you owe. Regarding the credit report, the history of your missed payments on the debt will remain on your credit report for 7 years. 

The creditor can pursue collections against you for the debt. They may send letters, call, or go to court and sue you. You should try and set money aside so you can negotiate a settlement with them when they contact you.

TTony, Jun, 2020

Dealership manager took advantage of me an my situation an he made me false promises to me an left me with a higher car note and more debt. I can't afford my upside down vehicle and I'm thinking of going the voluntary repo route an not paying anything at all anymore bc I just cant. Who has been down this rode already or can give suggestions an advice btw my car is worth 18k an I'm suppose to pay 40k over time for it. Which is not happening.

DDaniel Cohen, Jul, 2020

Tony, I am sorry to read that you were taken advantage of. Unfortunately, that is unlikely to affect the situation. The car willl be auctioned, the auction balance (less some costs associated with the auction) applied to your debt and the remaining balance your responsibility. Given the size of the debt that will still be your responsibility, I would first speak with a bankruptcy attorney, before you go the repo route.

Secondarily, try to get something positive out of what, overall, is a lousy experience. I imagine you learned something about car salespeople and won't get taken advantage of again. I suggest you look at what caused you to buy such an expensive car. I am not judging you. I do believe you could have had reliable, pleasing transportation without a car that cost so much.