Can a person voluntarily return a car to the bank to avoid repossession?

Repossession

That is a repossession. Anytime the lender get's the car back instead of the money agreed to on the contract, it's a repossession. It will show as a voluntary repossession. And hurts the credit.

Doing it

Doing it does not relieve you of any deficiency between the amount the car gets sold by the bank for and the amount you owe.

However, you would save many of the costs that the bank would have to expend, (fee's, towing, etc.,) that would become part of the amount you owe (hence make that possible deficiency bigger) in a "normal" repossesion.

It is definately better, ABSOLUTELY ALWAYS, to co-operate, even work with the lender if you cannot make payments and would end up with an involuntary repossession. And when you do this "possession in lieu of forced repossession", you may be able to get them to agree to any number of things: Perhaps even waiving any deficiency; very possibly along with allowing you some time to sell it yourself - which is cheaper to all than having to have a broker and such involved, and can get substantially more for the car than it being sold in a bankers wholesale auction.

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