Our editorial team is independent and objective. To help support our review work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the CreditMashup site. This site does not include all companies or products available within the market.

We also include links to advertisers’ offers in some of our articles; these “affiliate links” may generate income for our site when you click on them. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impact any of the editorial content.

While we work hard to provide accurate and up to date information that we think you will find relevant, CreditMashup does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof. Here is a list of our partners who offer products that we have affiliate links for.

Will surrendering a vehicle save your credit scores

Surrendering your vehicle also known as voluntary repossession to the lender does not void the car loan contract. You are still responsible for the loan and deficiency balance.

Surrendering your vehicle to the lender does not void the car loan contract. You are still responsible for the loan.

Question: Hi, I had are car that I did a voluntary repossession with. Back in 2014. I now have a new debt on my credit report opened 11 months ago after the debt was sold to a debt collection agency. Is that legal. When I filed the dispute on line I was told that it was a legal account. What can I do?

Definitely continue to make on-time payments with your new lender. But you have to understand that a surrendering your vehicle (voluntary repossession) is treated just like a car repo.

In terms of credit, there is no difference between a voluntary or involuntary repossession.

You are responsible for any deficiency balance. Plus, if the loan is still within the statute of limitations on debt, the lender or a collection agency can pursue legal action to garnish wages. You may not have any options other than to pay the debt.

I'm not sure if the old car had some type of defect that caused you to surrender it. If so, you may have some legal recourse to pursue based on the laws in your state and the loan contract. I suggest you seek legal advice from a consumer law attorney in your state. You can find a consumer law attorney at naca.net. Perhaps they can work out a favorable outcome.


I know it's difficult to make payments on a car you no longer want, but in the end, surrendering a car is often more troublesome than if you had kept it.

Even if the car is a junker, you can't expect to get out of a car loan contract simply by giving the car back to the lender. It doesn't work like that.

My only suggestion is if you decide to make payments, try to negotiate a pay for delete agreement wherein lender removes the charge-off from your credit reports in exchange for payment.

Unfortunately a paid charge-off is still considered negative and will not help your credit score even though it looks better on your credit reports and will keep the lender from filing a court action.

If a lender is successful in getting a judgment against you, it won't just be for the deficiency balance on the car. Deficiency judgments accrue interest the entire time they are unpaid. In addition, a judgment may include all accrued fees on top of the remaining balance of the car loan.

A default judgment (if you don't answer the complaint) can end up having interest and more fees added to it. I'm not trying to scare you but a judgment does far more harm than a charge-off on credit reports because it can last 10 to 20 years depending on your jurisdiction.

Plus, many states allow judgments to be renewed by the creditor that owns the debt at the time, essentially having the potential to never go away.

Join the family!

Get expert tips, news, and resources delivered to your inbox weekly.

You have been successfully Subscribed! Ops! Something went wrong, please try again.

Get In Touch

6080 Center Dr, 6th Fl
Los Angeles, CA 90045

© 2024 All Rights Reserved.