She wants to just have it over with

What Happens When You Turn In a Car You Can't Pay For?

by Steve Rhode


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Question:

Dear Steve,
I used to work for the Department of Defense on a military base. I worked for several years. I had to stop about six months ago. My husband is a retired disabled veteran.

Now, we have too many payments and one paycheck from his retirement and Social Security. We decided to voluntarily turn one of our vehicles in to eliminate that payment and be able to help our son with the payment of a studio on campus, so he won't have to drive every day anymore.

What happens when we turn in a car because we cannot afford paying for it?
Daisy

Answer:

Dear Daisy,
When you turn the vehicle back in, they will sell it at a wholesale auction for a lesser amount than you owe. You will then owe the difference between the current loan value and the selling price of the car at auction. You may then be sued for the balance owed.

You should either negotiate with the lender to turn the vehicle in without owing additional money, sell the vehicle for what you owe, or consider bankruptcy to turn the vehicle back in and terminate the remaining balance owed if the other options do not work.

Want to pay off your car faster? Consider refinancing into a lower auto rate.

It will also appear as a repossession on your credit report if you turn it in or they come and get it. Turning it in voluntarily can save a bit in repo costs, but that will be peanuts compared to the bigger bill you will probably get.
Steve Rhode
Get Out of Debt Guy - Twitter, G+, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.


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