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Are you in a tight financial situation, where you cannot make the monthly payments on the loan you took out to get your car? Perhaps you are in a situation where you have failed to make the last payment, or even the last few payments. If this is the case, you may be considering the idea of voluntarily having your vehicle repossessed so that you could get rid of the problem and relieve yourself of further obligation toward that loan.

However, there are several pitfalls you will come across if you choose this option. You need to know just what kind of an effect this action will have on you and if you really will be relieved of your obligations. If you are struggling with this decision, here are a few things that will help you to know a little bit more about it before you make a concrete decision.

1. Same Consequences

Getting your car repossessed voluntarily, however responsible and reasonable it may seem, will still hurt your credit. Your credit report will still have the same black mark on it for seven years or so as it would if your car was repossessed against your will. Repossession is repossession, no matter who issued it.

2. No Longer Your Car

Repossession is pretty much self explanatory. The car is taken back by the people that you bought it from, or rather the people you got the loan from to pay for it with. Therefore, you have absolutely no say concerning what happens to the car after the repossession, voluntary or not. However, you are allowed to buy your car back.

3. Deficiency Balance

Because the car is no longer yours, it may be sold by the lenders you got the loan from, and the money they get from it will go to the payments you have not made and the debt you still owe on that vehicle. If the car sells for less than what you owe, which it often may, depending on how much you have left to pay on your loan, then you are still obligated to the lenders to pay the deficiency balance, or the original cost of the car that is still owed on the loan. Lenders have the right to sue you for this money if you do not pay it. However, if your car that has been repossessed sells for more than the balance owed, the lenders are under the obligation to give YOU the excess money that is brought in from that sale.

4. Find Another Way

Because repossession is so bad for your credit and has only the potential to do you more harm than good, you should most likely consider another option to get you out of your debt problems that would be less damaging in the long run. Remember that lenders, if confronted civilly, will often help you out of your situation. They have several options you could take, like, rewriting your loan agreement, or lowering your monthly payment to make it possible for you to reasonably pay your bills on time.