Voluntary Vehicle Repossession
    Consumers may buy a car by availing an auto loan or they may choose to lease the car. People, generally, lease if they feel that the advantages of leasing outweigh the benefits accrued by buying a car. The article on “Leasing vs. Buying a Car” examines this issue in great detail. Regardless, of whether people lease or avail an auto loan, they have certain obligations pertaining to the discharge of lease or loan payments, as the case may be. In case they are unable to repay their creditors, or their lessors on time, the vehicle can be repossessed by the creditor or the lessor as per the agreement outlined in the contract drawn in conformity with the state vehicle repossession laws. Some states also allow the vehicle to be repossessed in case the lessee / debtor does not have adequate auto insurance. Moreover, the creditor or the lessor need not get a writ from the court in order to repossess the vehicle or forewarn the debtor. The creditor may also have the right to sell the car to a third party, commonly known as the assignee, who can repossess the vehicle, failing timely payments. One should try contacting the creditor or the lessor and express the inability to make regular payments. Negotiating the terms of the payments and preparing a fresh schedule of payments may help averting a possible vehicle repossession.
    Voluntary Vehicle Repossession
    Sometime, people may voluntarily call up the lender or the lessor and hand over the car on account of the inability to make regular payments. In this case, the repossession is referred to as voluntary vehicle repossession.
    Eliminates Repossession Fee: Agreeing to voluntary repossession results in reducing additional expenses, for the lessor or the creditor, since he / she does not have to hire the services of a repossessor. Any fee, that is paid by the lender for the purpose of repossession, is passed on to the defaulter in the form of repossession fee. Voluntary repossession saves the defaulter the burden of paying the repossession fee; a small omission that may be appreciated by the consumer / defaulter whose inability to keep up with regular payments could be the result of strained finances.
    Impact on Credit Report, Credit Score and Credit Rating: Vehicle repossession remains on the credit report for 7 years from the day of delinquency. This impacts the credit history adversely, thus lowering the credit scores of the delinquent individual. The result of a poor credit score can be manifold. A person, whose vehicle has been repossessed, will find it exceedingly difficult to avail loans at a favorable rate of interest. Moreover, credit card companies may reduce the credit limit on the cards and may also charge a higher APR (Annual Percentage Rate) on account of the risk of default. The credit rating for a consumer ranges from I0 to l9 assuming that the loan is repaid in installments (R0 to R9 for revolving credit). R8 / I8 indicates a situation where debts are recovered by repossession. The credit report of a person, whose vehicle has been repossessed, will carry a rating of I8 since the debtor defaulted on loan or lease payments, that are repaid in installments, thus resulting in repossession. The article,”What is a Good Credit Rating”, discusses credit ratings in great detail. Voluntary repossession does not eliminate the chances of the creditor mentioning the late payments or the repossession in the credit report.
    Paying the Deficiency: Deficiency is defined as the difference between the amount owed by the consumer and the money obtained by the creditor on selling the repossessed vehicle. The creditor is allowed to sue the consumer to recover the deficiency. If the selling price of the car exceeds the amount owed by the debtor, the consumer is entitled to the surplus. Again, voluntary repossession cannot prevent the debtor from getting sued.
    It’s evident that repossession has a number of negative consequences. However, a creditor or a lessor has to abide by the State Laws regarding repossession. The law may require the creditors / lessors to sell repossessed vehicles and reduce or eliminate the debts of the consumers. Violation of the laws may render the creditor liable to pay for the distress and the damages caused to the delinquent consumer.
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