When voluntary repossession takes place
Not all vehicle repossessions are stealthy actions placed in the capable hands of repossession agents and their tow trucks. When consumers realize that they are indebted to the agency that owns their rented or leased vehicle, and they have no means of reconciling that debt, they may choose to give over the vehicle independently. This turning over of a debt inducing car to the financial firm that owns it is known as Voluntary Repossession.
Comparing voluntary repossession with involuntary repossession
In basic actions, it is very similar to an involuntary repossession. The main difference is that by voluntarily giving a vehicle to be repossessed, the debtor may avoid having to reimburse the fees a lender must put forth to employ a repossession company.
Asking for voluntary vehicle repossession
If you are in this position, and have decided that it might be beneficial to voluntarily repossess your vehicle, there are some processes to attend to. First, you should contact the bank or financial agency that holds your automotive loan. Communicate your inability to pay off the loan and your desire to have the car or truck repossessed voluntarily.
At this point, you can arrange with said financial institution a time and location to repossess the vehicle. The vehicle should be cleaned out of any personal items or belongings. This is a task that might not be available to you if your vehicle were to be repossessed involuntarily.When your car is repossessed, usually it is then sent to auction where it is sold at cost. Sometimes the selling cost of a car shakes out to be less than the money owed on it. In this case the debtor is responsible for the difference. Sometimes, those who opt for voluntary repossession can ask that the financial institution wave this difference in return for their show of responsibility and good faith by volunteering the automotive property. If however, the bank is unwilling to waive this cost a payment plan must be set up and adhered to to resolve the remaining debt. It is crucial to procure a written document from the institution at hand that states the date and nature of the voluntary repossession and the arrangements made for the resolution of any additional debt. This will ensure that, should any mistakes be made in the future by the bank and claims that you continue to remain in their debt are made, you will have proof of the contrary.
Voluntary repossession and credit reports
In the case of your own personal finances, voluntary repossession can be beneficial over involuntary repossession. Any sort of repossession will be recorded on your credit report, and may stay there for up to seven years. However, the nature of the repossession can be noted, and if voluntarily given, looks better.
When it comes time to get a new car, and another auto loan is required, it will be easier to achieve because the last vehicle was repossessed voluntarily and resolved. Still, unfortunately you interest rates will be higher and less forgiving. While the state of affairs that leads anyone to a place where their car must be repossessed in any nature can feel grim, if the best possible choices are made in voluntary repossession, swift recovery is achievable.