Yes, you will still be responsible for the loan or debt on your vehicle even if you voluntarily turn it in. If you have a vehicle that you cannot make payments on, you have the choice of voluntarily surrendering the car or you can let the creditor repossess it. What many people do not know is voluntarily surrendering the vehicle is still considered a reposession on your credit report, a voluntary reposession.
When you voluntarily surrender a vehicle, you take the vehicle back to the lender on your own terms. You can usually contact the lender and they will work with you on a time to turn the vehicle back in.
If the vehicle is non-voluntarily or involuntarily repossessed, they will come and get the vehicle on their terms. The lender may not care when this is and it could even occur at night or at a time when you are not around. There are also fees associated with a repossession that you can avoid if you voluntarily surrender the vehicle.
Although voluntarily turning a vehicle in sounds like a better option, it’s important to know the consequences of a voluntary reposession. When you surrender a vehicle, it will be sold again. The lender will then send you a bill for what is called a deficiency balance. This is the difference between the amount you owed on the vehicle and what they were able to sell the vehicle for. So say if you owed $14,000 and they sold the vehicle for $8,000, you would still be responsible for the difference of $6,000. This is the same thing that would occur if the lender had involuntarily repossessed your vehicle.
So in the long run, you will be responsible for part of the loan if you voluntarily surrender your vehicle. Depending on how much you owe on the vehicle and how much the lender resells the vehicle for will determine the deficiency balance. You will be responsible for the deficiency balance and the voluntary reposession will still show up on your credit report.
If you file for bankruptcy then you may be able to avoid the repossession appearing on your credit report (if you file before the repossession) and you can wipe out the deficiency balance on the vehicle.