Can You Give Your Car Back to the Finance Company

If you’re struggling to make car payments and are considering giving your car back to the finance company, it’s important to do it the right way. Voluntary repossession can damage your credit score and may make it difficult to get financing for another vehicle in the future. To avoid this, contact the finance company to explain your situation. They may be willing to work with you to find a solution, such as lowering your payments or extending your loan term. If necessary, you can also surrender the car to the finance company, but it’s crucial to follow the proper procedures to minimize the negative impact on your credit score.

Voluntary Surrender

If you’re struggling to make car payments, you may consider voluntarily surrendering your car to the finance company. This is a last resort option, but it can help you avoid the negative consequences of defaulting on your loan, such as repossession, damage to your credit score, and potential legal action.

To voluntarily surrender your car, you’ll need to contact your finance company and explain your situation. They will likely ask you to return the car to a specific location, such as a dealership or auction house. Once you’ve surrendered the car, the finance company will take ownership of it and sell it to recoup their losses. You may still be responsible for any outstanding balance on your loan, but surrendering the car can help you avoid further penalties and damage to your credit.

Returning a Financed Car

Sometimes owning a car becomes financially unmanageable. When this happens, understanding your options is vital to avoid further stress.

Alternatives to Returning the Car

Before considering returning your car, explore other options to regain financial stability:

  • Negotiate with the lender: Contact the finance company and request a payment plan that aligns with your current situation.
  • Sell the car privately: If you can afford to pay off the remaining loan, consider selling the car to cover the cost.
  • Trade-in the car: Explore trade-in options with a different dealership, as the trade-in value may offset the loan balance.
  • Refinance the loan: Secure a loan with better terms, such as a lower interest rate, to lower monthly payments.

Returning the Car to the Lender

If other options are not viable, the last resort is to return the car. This process, known as voluntary surrender or repossession, involves the following steps:

  • Contact the lender: Inform the finance company of your decision and request instructions.
  • Clean the car: Remove all personal belongings and clean the vehicle.
  • Return the car: Deliver the car to the lender’s designated location and hand over the keys.
  • Pay any outstanding balance: You will be responsible for any remaining loan amount, late fees, and other charges.


Returning a financed car can have serious consequences:

  • Impact on credit score: Missed payments and repossession can negatively impact your credit history.
  • Legal repercussions: Failure to maintain insurance or pay the loan can lead to legal consequences.
Consequences of Returning a Financed CarImpact
Missed paymentsNegative credit score
RepossessionNegative credit score, difficulty obtaining future loans
Insurance lapseLegal repercussions, personal liability
Unpaid loan balanceCollection efforts, legal action

Impact on Credit History

Returning your car to the finance company can have a negative impact on your credit history.

  • Late Payments: If you have missed payments on your car loan, returning the car will not erase those late payments from your credit report.
  • Repossession: If the finance company repossesses your car, it will be reported as a “repossession” on your credit report. This can severely damage your credit score and make it difficult to obtain credit in the future.
  • Voluntary Surrender: Even if you voluntarily surrender your car, it may still be reported as a repossession on your credit report. This is because the finance company may view it as a type of default.
Consequences of Returning Your Car to the Finance Company
ActionImpact on Credit History
Late PaymentsLate payments will remain on your credit report.
RepossessionRepossession will be reported on your credit report, severely damaging your score.
Voluntary SurrenderMay be reported as a repossession, damaging your credit score.

Legal and Financial Consequences of Returning a Financed Car

Returning a financed car to the finance company, known as voluntary surrender, is a serious decision with significant legal and financial implications. Before considering this option, it’s crucial to understand the potential consequences.


  • Repossession: The finance company has the legal right to repossess your car if you fail to make payments or breach other terms of the loan agreement. Voluntary surrender prevents repossession, but it still appears on your credit report.
  • Deficiency Judgment: If the value of your car is less than the outstanding loan balance, the finance company may obtain a deficiency judgment against you. This means you could be legally obligated to pay the difference.
  • Negative Credit Impact: Voluntary surrender severely damages your credit score. It remains on your report for several years, making it difficult to obtain future loans or credit at favorable rates.
  • Loss of Equity: You will lose any equity you have built up in the car. The finance company takes possession of it and sells it to recoup their losses.
  • Fees and Expenses: You may be responsible for additional fees, such as repossession and storage costs.

Financial Implications

ConsequenceFinancial Impact
Deficiency JudgmentLegally obligated to pay the difference between the car’s value and loan balance
Loss of EquityLoss of any built-up equity in the car
Repossession and Storage FeesAdditional expenses incurred during the repossession process
Negative Credit ImpactLower credit score, making future borrowing more difficult and expensive
Insurance CostsMay be required to obtain “non-owner” auto insurance, which can be expensive

Before surrendering your car, consider all the potential consequences and explore alternative options, such as refinancing or selling the car privately. Voluntary surrender should be a last resort when other options have been exhausted.

Hey there, I hope you found this article helpful in navigating the complexities of returning your financed car. Remember, every situation is unique, so don’t hesitate to reach out to your lender for specific guidance. Thanks for taking the time to read, and I’ll catch you later for more automotive adventures!