A voluntary surrender on a loan is definitely not something you want to experience. Unfortunately, I’ve been through it myself, so I can speak from personal experience on this matter. The impact it can have on your credit is significant and long-lasting.
To answer your question directly, a voluntary surrender will stay on your credit reports for a period of seven years. This means that for seven long years, that negative mark will be visible to anyone who pulls your credit report, including potential lenders. And let me tell you, it’s not a pretty sight.
When I went through a voluntary surrender, I had to give up my car because I simply couldn’t afford the payments anymore. It was a tough decision to make, but I knew it was the responsible thing to do rather than defaulting on the loan entirely. Little did I know, it would haunt me for the next seven years.
Having a voluntary surrender on your credit reports is essentially a loan default. And loan defaults are a red flag for lenders. When you apply for a car loan or any other type of loan in the future, you’ll likely be considered high risk. Lenders will see that you couldn’t handle your previous loan obligations and may be hesitant to lend you money.
Even if you do manage to secure a car loan after a voluntary surrender, you’ll likely be hit with high interest rates. Lenders see you as a higher risk borrower, so they’ll try to protect themselves by charging you more in interest. This can add up to thousands of dollars over the life of the loan.
What’s even worse is that the negative impact of a voluntary surrender goes beyond just your credit scores. It can also affect your automotive-specific credit scores, which are used by lenders specifically for car loans. So not only will your overall credit scores suffer, but your automotive credit scores will take a hit as well.
In my own experience, I found it incredibly difficult to get approved for a car loan after my voluntary surrender. I had to settle for a loan with a high interest rate, which made my monthly payments much higher than I had anticipated. It was frustrating and disheartening to see how much that one decision affected my financial future.
So, if you’re considering a voluntary surrender, I urge you to think twice. It may seem like the easiest way out in the moment, but the long-term consequences can be severe. It’s important to explore all other options and try to work out a solution with your lender before resorting to a voluntary surrender.
A voluntary surrender will stay on your credit reports for seven years. During that time, it will negatively impact your credit scores, especially your automotive-specific scores. This can make it difficult to get approved for future car loans and result in higher interest rates if you do manage to get approved. Trust me, I’ve been there, and it’s a situation you want to avoid if possible.