Pros And Cons Of Voluntary Repossession


Voluntary repossession is the process of returning a vehicle to the lender voluntarily to avoid the repossession process. It can be a difficult decision to make, but it can also have both positive and negative consequences. In this article, we will discuss the pros and cons of voluntary repossession.

Pros of Voluntary Repossession

1. No Repossession on Your Credit Report

One of the biggest advantages of voluntary repossession is that it can save your credit score from being damaged by repossession. Repossession is a serious mark on your credit report and can stay there for up to seven years, affecting your ability to get loans, credit cards, and even jobs.

2. Avoid Legal Action

When you voluntarily surrender your vehicle, you can avoid the legal action that comes with repossession. This means that you won’t have to worry about being sued for the deficiency balance, which is the difference between what you owe and what the lender sells the car for.

3. Free Yourself from Debt

Voluntary repossession can help you free yourself from the debt of a car you can no longer afford. By returning the car, you can eliminate your monthly car payments, which can help you get back on your feet financially.

4. Avoid Repossession Fees

In addition to the deficiency balance, repossession can come with fees that you will have to pay. These fees can add up quickly and make it even harder to get back on track financially. By voluntarily surrendering the car, you can avoid these fees altogether.

Cons of Voluntary Repossession

1. Damage to Your Credit Score

While voluntary repossession can save your credit score from repossession, it can still have a negative impact on your credit. Your credit report will show that you voluntarily surrendered the car, which can make it harder to get loans or credit in the future.

2. Potential for Deficiency Balance

Even though you returned the car voluntarily, there is still a chance that you may owe a deficiency balance. This is the difference between what you owe and what the lender sells the car for. If the lender cannot sell the car for the full amount owed, you may still be responsible for the remaining balance.

3. Loss of Transportation

Returning your car means that you will no longer have transportation. This can be especially difficult if you need a car to get to work or take care of your family. You will need to find alternative transportation until you can afford a new car.

4. Negative Impact on Future Loan Rates

Voluntary repossession can also have a negative impact on your future loan rates. Lenders may see you as a higher risk borrower and charge you higher interest rates as a result.


In conclusion, voluntary repossession can be a difficult decision to make. It can save you from the negative consequences of repossession, but it can also have its own negative consequences. Before making this decision, it’s important to weigh the pros and cons and consider your financial situation carefully.