As soon as you drive off the lot, you already owe more on the loan than your car is worth. When you find yourself unable to make your car payments and ultimately choose to return the vehicle to the dealer (which is known as voluntary repossession), the dealer usually turns around and attempts to re-sell the vehicle.
What does buy here pay here mean for car financing?
Buy-here, pay-here loans can help people with poor credit secure auto financing. They’re offered by car dealerships that provide in-house financing — meaning the dealership both sells and finances its cars. But you may encounter a speed bump or two with buy-here, pay-here financing.
Can you get out of a buy here pay here contract?
Unfortunately, to get out of a buy here pay here (BHPH) contract, you can’t just return the vehicle to the car lot and walk away if you haven’t finished paying for it. If you do, it’s considered a voluntary repossession, and it negatively affects your credit score. Just like any auto loan, you’re bound to the terms stated in a signed contract.
What happens when you borrow money to buy a car?
He covers banking and loans and has nearly two decades of experience writing about personal finance. When you borrow money to buy a car—or if you lease a car—you don’t own the vehicle “free and clear.” You get to drive the car, but your lender can take it away through repossession if you stop making payments.
Can you return a car you bought with a loan?
If you took out an auto loan to finance the purchase of a new or used vehicle, there are several possibilities for returning it and getting out of the loan agreement, or making your loan payments more manageable. There are a number of reasons why you may need to return a financed vehicle.
What happens to my car when I voluntary surrender it?
Be sure you completely understand the terms when you make the voluntary surrender. The lender will resell the vehicle, and the proceeds will go toward the balance you still owe on the loan. If there is still a balance remaining after the sale and you don’t pay it, it could be turned over to a collection agency.
What happens to my credit when I resell a car?
The lender will resell the vehicle, and the proceeds will go toward the balance you still owe on the loan. If there is still a balance remaining after the sale and you don’t pay it, it could be turned over to a collection agency. This may result in a collection account being added to your credit history.
