A voluntary repossession will likely cause your credit score to drop by at least 100 points. This point drop is due to a couple of factors: the late payments that cause the repo and the collection account that is likely to result from it.

What is the difference between a repo and a voluntary repo?

The Differences Voluntary repossession is exactly what it sounds like: you give up your car to the dealer or lender. If you don’t take the vehicle in yourself, an involuntary repossession occurs. This means that the repo man will show up at any given time or place to seize the vehicle without warning.

How does voluntary repossession affect your credit score?

According to Experian, one of the three main consumer credit bureaus, your credit report will list “voluntary surrender” instead of “repossession,” which may do slightly less damage to your credit. The negative impact to your credit may make it more difficult to get a loan down the road.

What happens if you have a repo on your credit report?

Just because you have a repossession on your credit report does not mean that you have to delay in purchasing a home… but that doesn’t mean it’s not a problem. Okay, so let’s say you have a repossession from 2005.

What happens to my credit if I repossess my car?

But returning your car to your lender could have serious financial consequences, including your account going into collections and your credit taking a hit. Let’s take a look at the impact that a voluntary repossession can have on your finances, along with alternatives to consider before you hand over your keys.

What happens if you have a voluntary Repo?

Voluntary or not, a repossession is a repossession — and ultimately, an indicator that a debtor failed to keep up with their payments. As one Experian spokesperson explains, “You will be viewed as high risk and will likely pay a much higher interest rate if you can get approved for a new loan at all.”