If you voluntarily turn in your car will it effect credit?

Voluntarily turning in your car will likely have a negative impact on your credit. This is because when you turn in your car, the lender who financed the vehicle will repossess it and sell it at auction. The amount of money that the lender receives from the sale of the car will be used to pay off the remaining balance of your car loan. If the sale price of the car is less than the amount that you owe on the loan, you will be responsible for the difference. This can lead to a collection account being placed on your credit report, which can lower your credit score.

In addition, voluntarily turning in your car can also be a sign to potential lenders that you are at high risk of defaulting on a loan. This can make it more difficult to obtain credit in the future.

Here are some tips to avoid having to voluntarily turn in your car:

* Make sure you can afford the car payments. Before you buy a car, make sure you calculate the monthly payments and ensure you have enough money in your budget to cover them.

* Keep up with your maintenance. Regular maintenance can help to keep your car in good condition and avoid costly repairs.

* Build up your credit score. A good credit score can help you to get a lower interest rate on a car loan and make it easier to get approved for credit.

* Consider getting a co-signer. If you have a low credit score, you may be able to get approved for a car loan if you have a co-signer who has good credit.

If you are struggling to make your car payments, there are a few options you can explore to avoid having to voluntarily turn in your car:

* Contact your lender. Your lender may be willing to work with you to lower your interest rate or extend your loan term.

* Get a part-time job. If you need some extra money to make your car payments, consider getting a part-time job.

* Sell your car. If you can no longer afford your car, you may want to sell it. You can sell your car privately or through a dealership.

Voluntarily turning in your car should be a last resort. There are a number of other options you can explore to avoid this situation. If you are struggling to make your car payments, contact your lender or a financial advisor for help.