In 2020 I helped my step dad by co-signing to buy a Dodge Caravan 2016 for about 23k, great van, but sadly it won’t pass my states emissions tests unless we replace both catalytic converters which would cost over $2k.
Around August last year, I lost my job as a caregiver when my grandfather passed unexpectedly and since then I’ve been trying to recover economically due to this situation I’ve amounted a due balance of about $2,800.
I was trying to scrap something together to continue paying it off since there’s only a total of $4,200 left to complete the loan but truthfully I’m just not making enough to cover for my needs, help my family, and pay off a car that doesn’t even work.
I was thinking of trading it in but I don’t need another bill so while I build up some money I think what would be best is to give it up but whenever I’ve tried asking the people from Credit Acceptance what my options are they never have a clear answer.
Would surrendering the car be detrimental to my credit? I’m already not doing so hot after a collection that I settled in 2022. How long would something like this stain my record? Could I get another car loan? Do I still have to pay the due balance?
How will surrendering a loaned car affect my credit?
byu/NameHuman9858 inpersonalfinance
Posted by NameHuman9858
14 Comments
It will definitely affect your credit score.
And if you still owe on it, giving up the car doesn’t not make the debt go away. They’ll sell the vehicle for pennies and sue you for the difference.
>Would surrendering the car be detrimental to my credit?
Yes, absolutely.
>How long would something like this stain my record?
Likely for at least 7 years.
>Could I get another car loan?
Probably not after surrendering this one (at least not easily).
>Do I still have to pay the due balance?
It depends on the value of the van compared to what you owe. If they repossess the van and it is worth more than what you owe, that might cover the balance.
HOWEVER, the value they ascribe to it will be as low as possible and they will subtract the costs of repossession. In reality, the value they’re weighing the balance against will be several thousand dollars less than the true vale.
**Edit to expand on this:**
They’ll just auction it off. The auction sale price will be very low, then they’ll subtract all of their costs from that. Whatever is left (maybe a few hundred bucks) will go to your balance.
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To simplify things:
**Do not do this!**
It is pretty much the worst thing you can do.
In your case, the situation really isn’t *that* bad. Unless the van is completely wrecked, it is probably worth more than the balance of the loan, even with the catalytic converters.
Take a personal loan or put the catalytic converter repairs on a CC, then immediately sell the van. Use the proceeds to pay off the personal loan/CC, then the remainder of the auto loan balance. If you’re lucky, you might have some leftover.
And $2k for catalytic converters is expensive. Are you sure that’s what you actually need?
*Both* catalytic converters failing at the same time is unlikely. Were they stolen?
If both do require replacement, aftermarket cats can be significantly more affordable (compared to OEM).
Take it to Carmax or Carvana. They may give you $4,200 for it.
Just curious why you, the unemployed co-signer, are the one paying for this loan? Why did your step-father dump this on you? Have you spoken to your mother about this?
As others have said, simply surrendering the vehicle is not going to make this problem go away so please don’t do that. At worst, do you have a neighboring state with lax emissions standards, and could you get the vehicle there to sell it?
Never co-sign for anything or anyone ever again. Why is your stepdad not paying for the loan?
What is “help my family” mean? You are in no position to help anyone. Help yourself.
Surrender = repo. Just without hiding from the repo man.
So exactly the same way as a repo does. Destroys your credit, stays for 7 years, could possibly be sued for what you owe.
For that small of a balance, you can probably sell it for all or most of what you owe. That’s the move.
You will likely end up with a judgment for a deficiency and depending on your state, they can garnish your pay and put a lien on any real property you have, or will have. The deficiency will include lots of extra costs, like court costs, filing fees, attorney fees, so that could end up costing as much or more than the $4000. Judgments are typically good for 10 years and can be renewed for another 10 years.
Why surrender (repo) and have them auction it off for a fraction of the amount you could sell it yourself for?
You’ll owe the difference either way might as well get as much as you can for it.
A “Voluntary surrender” is just a repossession with less steps. You make it a little bit easier for the bank.
But it won’t make it any better on the impact to your credit. It’s still a repossession as far as your credit is concerned.
A 2016 Dodge Caravan — unless it’s just beat to shit and has over 200,000 miles — is worth north of $8K. Potentially more than $10K for a loaded trim in good shape.
Don’t give-up an $8K+ vehicle with a $4K loan due.
Take that vehicle to CarMax or use AutoTrader’s service who will market it to local dealers, and see what you will get for it.
Even needing cats, it’s probably got a wholesale value in the vicinity of the $4K that you owe. And a dealer won’t care that you don’t have a clear title (i.e. you still owe money on it). They will just pay the loan for you in lieu of giving you a check.
Why are you paying for it if you only co-signed? Is he is a POS that broke contact with you and your mother and stopped paying?
Do not surrender the vehicle. Keep the lender posted and send anything you can to show you are serious. In Arizona, there’s a program to help pass emissions, where the owner only pays $100 out of pocket. Reach out to your state or county.
I cosigned for my oldest son while he was in college on a used Hyundai ( bad decision). Car’s sprung a leak. I offered to buy the part and replace with him. He decided to have someone else repair, but failed to do the repairs. He drove the car with no coolant and warped the head, requiring an engine replacement (repairs were more than car was worth). He decided he couldn’t afford and left the car in at an abandoned house. I paid on the loan for 3 years until it was paid off, because he saw no use in paying on a loan for a car he couldn’t drive. Both of our credit remained good. So to answer your question. As cosigner you’re on the hook for the loan unless the creditors release you from responsibility.
Not sure what state you’re living in, but I had a similar emissions issue with my old 2010 Nissan Murano that would not pass the state emissions test. I was quoted around 3k for both converters but was also told by the shop mechanic that I would be able to get it to pass the emissions test by running a cycle or 2 of CataClean through it which actually worked.
I would definitely try that before surrendering the vehicle.
You need to contact your lender and explain the situation to them. They don’t want your vehicle, they want their money they loaned you. If you just surrender the car, then you have nothing and no transportation, plus you still have to pay off the remainder of the loan.
If you’re trying to scrape together money to pay off the loan then you should just get enough together to fix the catalytic converters instead and try door dash and maybe Uber or lyft. That will help you with your financial situation.