how bad is a voluntary repo on your credit

how bad is a voluntary repo on your credit

Voluntary Repo

1) What impact does a voluntary repo have on one’s credit score?

How Bad is a Voluntary Repo on Your Credit?

Repossessing a car is a significant financial setback for the owner. It is a painful experience to see a repossession agency tow away a vehicle that you have purchased with your hard-earned money. However, the impact of repossession goes far beyond losing the car. It also affects your credit score.

Repossession can happen both voluntarily and involuntarily. A voluntary repossession is when the owner returns the car to the lender before the lender has to send a repossession agency to recover it forcibly. Even though the owner chooses a voluntary repo, it still affects their credit.

What Happens to Your Credit Score?

There is no doubt that a voluntary repo leaves a significant impact on your credit score. In most cases, the owner’s credit score can drop up to 100 points, and it stays on their credit report for seven years. The impact on the credit score depends on how the lender reports it to the credit bureaus.

The impact on the credit score also depends on the owner’s previous credit history. If the owner has a low credit score, a voluntary repo further reduces the score even more. On the other hand, if the owner has a good credit history and timely repayments, the impact is lesser, but still significant.

What Are The Consequences?

The most significant consequence of a voluntary repo is the impact on the credit score. A low credit score can hurt when applying for a loan, credit card, or mortgage. It can cause the lender to reject the application or give a higher interest rate.

A voluntary repo can also lead to a deficiency judgment. A deficiency judgment is a legal order by the court stating that the owner owes the lender an amount equal to the difference between the sale price of the car and the amount owed on the car loan. The lender can then use this judgment to garnish the owner’s wages, or place a lien on other assets, such as a house.

What Can You Do?

If you are facing financial difficulties and think that you may not be able to keep up with payments, reach out to your lender. Discussing your situation with the lender can help avoid repossession and come up with a new payment plan that suits your budget. It’s always better to be proactive than reactive.

If the repossession has already happened, focus on rebuilding your credit. One way of doing this is by obtaining a secured credit card, which requires you to make a security deposit. Use it responsibly by making timely payments, and within time, your credit score will improve.


In conclusion, a voluntary repo is not the best option for anyone. It has significant consequences on the credit score and may lead to legal action if the owner is not careful. It is always better to try and work out an agreement with the lender before it reaches the stage of repossession.

Lastly, if a repossession has already happened, remember that it is not the end of the world. Focus on rebuilding your credit and making timely payments, and your credit score will eventually improve.

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