What happens if you return a financed car?

Can You Return a Financed Car Back to the Dealer?

People often get confused about how to return a financed car. They don’t know the exact answer to whether they can return a financed car after signing a dealership contract or not. Normally, the sponsored cars and the cars on loan are not returned but if someone may have a problem in paying the loan or if he has changed his mind about buying a specific financed car, he has to find a solution to return it or cancel the deal which is quite difficult. So, you need to understand everything about a financed car, return policy and the ways to return a car or cancel the contract.

CAN YOU RETURN A FINANCED CAR?

It is one of the most common questions related to a financed car but, unfortunately, it pops up in a buyer’s mind after signing a contract with a dealer. That’s why it seems a huge problem because once the contract is signed, then it depends on the dealer whether he wants to cancel the contract or not.Some dealers and companies offer the return policy. You should always ask about the return policy before signing a dealership contract. You should consider the companies like CarMax that offer the return policy after a specific time.

HOW TO RETURN A FINANCED CAR?

If the car dealer has a return policy, then there is not much problem but if you are not able to claim any refund policy, then you need to find the alternatives of returning a financed car. Obviously, these alternatives would not give you 100% favour but you would get rid of an unwanted car or contract by conceding a specific penalty.Following are some of the alternatives of returning a financed car:

1. TRADE IN WITH OTHER FINANCED CAR

If you just want to return a car just because you are not interested in a specific model aymore. You can always discuss with the finance service providers about your favorite model and you can always negotiate about the trade in option. You need to visit any used car finance services in Columbia MD to check for your favorite car.

2. REFINANCING THE CAR LOANS

If you are not able to afford the loan installments then you need to visit the dealer and negotiate about the loan contract. You should ask for a refinanced loan deal including a longer loan period with an affordable installments. It would be an easy approach to clear the full payment but you would pay some extra amount after refinanced deal with a new interest rate.

3. SELLING THE FINANCED CAR

You should try to sell the car to the dealers to get rid of an unwanted contract right away. Thus, you can get rid of a financed car but you would face a massive price depreciation because the dealers won’t buy it at the same price as it was being sold.

4. FINDING POTENTIAL VOLUNTEERS FOR REPOSSESSION

If the dealers are not letting you return a financed car by any means, you need to find any potential volunteer to buy a possession of your financed car. That volunteer would be responsible for the remaining loan and then he would be able to possess the car. It is a minimal penalty but it is a risky approach because the documentation of all loan payments are already done under your name, so you need to find any trusted and gentle volunteer to repossess your car.

CAN I RETURN A CAR AND GET MY DOWN PAYMENT BACK?

Unfortunately, you are not supposed to get your down payment back in normal situations;however, if you have already made a deal that the dealer would return your down payment while returning the car, you can get your down payment back while returning a financed car.

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RETURN FINANCED CAR WITHOUT PENALTY

If a penalty is taken as a legal action, it may be avoided by negotiations with the financers.;however, getting rid of the price devaluation of your financed car is inevitable. It is everybody’s dream to return a financed car without penalty because people return the financed car due to some solid reason. They may not be able to afford the loan payment anymore due to the bad financial condition. That’s why they want to return a car without any penalty. Unfortunately, it is not possible; although you have multiple options like trade in your car or resell it to another person who would be taking care of whole loan but you would still not get your down payment back or you would not be able to get the desired price if you would retrade it or resell it to the same dealer. That’s why, it is highly advisable to consult a detailed financial plan including the altering interest rates, over the years, and the worst cases before buying a financed car.

We hope this article has answered some of your most important questions about returning a financed car. If you any other question and problem, please left it s a comment here and give us the chance to answer it.

Can you return a financed car without getting a penalty?

There are a couple of ways you can return a financed car without penalty, but it depends on how long you’ve had the vehicle. If you request a voluntary repossession, that’s one way to return a financed car without penalty. You could also trade your lease, as another way to return a financed car without penalty, but that can come with fees of around $300.

UPDATED: Mar 29, 2022 Fact Checked

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Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura.

Written by Daniel Walker
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Reviewed by Daniel Walker
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UPDATED: Mar 29, 2022

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Can you return a financed car back to the dealer?

Depending on your auto dealer and the terms of your agreement, you might be able to return a financed vehicle. However, you should be aware that there may be a time limit for how long you have to take your car back for a return. If you are outside that period, you will likely be penalized for trying to return your vehicle.

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Some of the reasons you may want to return your car include:

You realized you couldn’t make the payments
The vehicle has a defect or other issue
You found a better offer somewhere else

There are likely dozens of reasons you might want to return your vehicle. If you feel it’s been a bad match, contact your dealer as quickly as possible to return your car and possibly get a new car. It would be wise to look at the terms and conditions of your agreement to see what it says before you go.

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What is voluntary repossession?

If you realize that you can no longer afford the payments on your vehicle and you’re worried about your car being repossessed, you can always start a voluntary repossession. During this process, your car financier will:

Repossess the car
Sell it to another driver
You’ll pay the difference between what the car sold for what you have on the loan

With this method, you get to offload the car for less than the full car payment, but you may still end up owing the bank a fair amount of money. If your vehicle is voluntarily repossessed, it means that you made the willful decision to give up your vehicle. You will also knowingly pay the difference when the car is sold to someone else.

This might be a good situation for those wondering how to let a car go back without ruining credit. The lender won’t be losing any money as long as you pay the balance between the car sell price and your loan.

What are alternatives to returning your car?

If you’re skeptical about returning the vehicle you’ve been paying off but need to do something, there are options. Depending on your lender, you may be able to adjust payments, give the car and lease to someone else, or refinance your loan.

These options are something you can do, but some will cost you more in the long run. So before doing anything, it’s wise to consider the situation and how you can benefit from each option.

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Can someone else take over my lease?

Having someone else take over your lease is a situation that can benefit both parties. For example, you’ll get out of a car lease that has become unaffordable while the other person receives a relatively new car that has been partially paid off. However, you should be aware of some of the additional charges or terms associated with giving your lease.

Some examples of what you could face when you transfer a lease include:

A lease transfer fee of around $300
Taxes on the vehicle
You’ll take over monthly payments as-is

Depending on how lenient your leasing company is, you may have to pay more to transfer the lease than you were paying each month. That being said, the one cost is better than having your account drained each month by a car payment that you’re unable to afford.

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When can I refinance my lease?

If you’re looking to get lower rates or a lower interest rate, refinancing your car might be an option. You should still be aware of the limits placed on refinancing. There are good and bad times to refinance your vehicle, depending on your loan and the company you took it out with.

Some examples of the best time to refinance your car include:

First 60 to 90 days: Most insurers won’t consider a refinancing application until the title has been transferred to the lender, which sometimes takes two to three months.
Six or more months after start: If you wait some time before you try to refinance, it’ll reflect positively on your credit score and allow it to recover from any drops.
Two or more years are remaining: To get the full benefit of refinancing, it’s recommended that you start the refinancing process when you have at least two years left.

In these cases, you’ll get the most benefit from a refinanced loan. While refinancing isn’t strictly limited to these circumstances, these guidelines will give you an idea of when you can start thinking about refinancing your vehicle to try and save on your monthly payments.

Is it possible to sell a financed car?

Are you wondering how to sell a financed car without paying it off? The most straightforward answer is that you can, but there are conditions that you should be aware of. For example, when you’re stuck with a car and recurring payments, you might want to offload the vehicle for the rest of the loan amount or more.

The first thing you should do is find the current going price for your car. According to J.D. Power , you can find your car’s value using various online tools, where you can see how much a private seller can reasonably get for the vehicle. It’ll also be wise to know how the value matches your cars’ loans.

What are possible penalties for returning a financed vehicle?

It would be nice if you could own up to your inability to pay and return the car without any hassle. However, that’s not how the system of financing a car works. Due to the ever-decreasing value of vehicles, lenders, and other circumstances, you may be faced with penalties when you attempt to return a financed car.

Some of the penalties you can expect when replacing your car include extra fees and a negative mark on your credit score. In addition, as previously mentioned, the insurer may try to sell off the car, and then you’ll have to pay the remaining balance on loan after that, without any vehicle.

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Returning a Financed Car: The Bottom Line

If you’re having issues with your financed car, you should know that you have options on how to proceed. Many people have had problems with car payments and haven’t lost their vehicles. Once you consider your options, you’ll know whether it is best to return the car or work out a deal with your lender.

Now that you know how to return a financed car without penalty enter your ZIP code into our free quote tool to see what you could pay today to cover that vehicle.

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Written by Daniel Walker
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Reviewed by Daniel Walker
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What is Voluntary Car Repossession?

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Article QuickTakes:

Advantages and disadvantages
Costs
How it impacts your credit
Deciding between voluntary and involuntary repossession

When you get behind on your car loan and miss several payments, you have two repossession options: have the car repossessed involuntarily or surrender the car, which is called voluntary car repossession.

Voluntary car repossession is when you arrange with the lender to return the car on your own terms, rather than forcing the lender or collection agency to find and repossess the car.

So what are the advantages of voluntary repossession? What are the disadvantages? Will you still owe money, and what’s the impact on your credit report?

Advantages and Disadvantages of Voluntary Repossession

Advantages

Though repossession isn’t a situation you want to encounter, engaging in the process voluntarily has some advantages, helping you to mitigate the stress, inconvenience, and financial impacts of a sticky situation. Some important benefits include:

You avoid the stress and embarrassment of an involuntary repossession
You choose when and where to return the car
You won’t incur the lender’s repossession costs, including repossession agents, towing, and storage fees
You won’t be caught unknowingly without transportation

Disadvantages

Many of the disadvantages that come with voluntary repossession are the same financial challenges you may encounter with any repossession. A few key concerns are:

You’ll still owe the remaining balance on the loan, or, if the car sells at auction, you’ll have to pay the deficiency balance
If you don’t pay the remaining balances, the lender could turn the account over to a collections agency or even take you to court
It has the same negative impact on your credit score as an involuntary repossession

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Costs

In any repossession scenario, you’ll owe the lender money. Unless the car sells for more than it’s worth at auction, you’ll likely owe the lender the deficiency balance, or the difference between what you still owed on the loan minus what the car sold for at auction, plus any repairs needed to get the car ready to sell.

With voluntary repossession, however, you might not be responsible for any of the costs incurred during the repossession process, including hiring a repo agent and paying for towing.

How Voluntary Repossession Impacts Your Credit

All repossessions will negatively affect your credit score and can remain on your credit report for up to seven years.

By arranging to return the car voluntarily, however, you can build some goodwill by communicating and working with the lender rather than hiding from the situation. Future lenders might look more favorably on a voluntary repossession than an involuntary one.

Realistically, lenders look at your credit history as an indicator of whether you can repay your future debts in a timely manner, and not the circumstances that caused you to fall behind.

You could also call your lender to see if it will agree to not report the repossession and missed payments if you surrender the vehicle voluntarily. Just be aware that some credit bureaus require lenders to report that information, so it could be out of the lenders’ hands.

Deciding Between Voluntary and Involuntary Repossession

Voluntary car repossession is only a slightly better option than involuntary repossession. You may be slightly more prepared and have some control over when you surrender your car.

Avoiding some of the extra fees that can come with involuntary repossession can be helpful too.

In terms of your credit, voluntary repossession can be the better option if you communicate and cooperate with your lender early on. In most cases, lenders would rather work with you than spend the time and money on the repossession process.

TAGS car repossession voluntary repossession involuntary repossession credit history

This site is for educational purposes only. The third parties listed are not affiliated with Capital One and are solely responsible for their opinions, products and services. Capital One does not provide, endorse or guarantee any third-party product, service, information or recommendation listed above. The information presented in this article is believed to be accurate at the time of publication, but is subject to change. The images shown are for illustration purposes only and may not be an exact representation of the product. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

Sheryll Poe is a journalist and freelance writer based in Washington, D.C. where she writes about the latest news and trends in the automotive, finance, retail, and technology industries. With over two decades of experience, Sheryll has bylined hundreds of stories for websites, magazines, newspapers for trade associations and business clients. When not wielding words on behalf of clients, she enjoys cooking (and eating), watching bad reality television, and traveling the world.

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What happens if you return a financed car?

Can You Return a Financed Car Back to the Dealer?

CAN YOU RETURN A FINANCED CAR?

HOW TO RETURN A FINANCED CAR?

1. TRADE IN WITH OTHER FINANCED CAR

2. REFINANCING THE CAR LOANS

3. SELLING THE FINANCED CAR

4. FINDING POTENTIAL VOLUNTEERS FOR REPOSSESSION

CAN I RETURN A CAR AND GET MY DOWN PAYMENT BACK?

RETURN FINANCED CAR WITHOUT PENALTY

Can you return a financed car without getting a penalty?

Free Auto Insurance Comparison

It’s all about you. We want to help you make the right coverage choices.

It’s all about you. We want to help you make the right coverage choices.

On This Page

Can you return a financed car back to the dealer?

What is voluntary repossession?

What are alternatives to returning your car?

Can someone else take over my lease?

When can I refinance my lease?

Is it possible to sell a financed car?

What are possible penalties for returning a financed vehicle?

Returning a Financed Car: The Bottom Line

What is Voluntary Car Repossession?

Advantages and Disadvantages of Voluntary Repossession

Costs

How Voluntary Repossession Impacts Your Credit

Deciding Between Voluntary and Involuntary Repossession

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