How long does a voluntary pension stay on my credit reports?

A voluntary repossession can stay on your credit reports for up to seven years, which is also the length of an “involuntary” pension. However, a voluntary pension can still have long-term benefits and could mean less of a headache for you in the future.

Impact of repossession on your credit

Repossession, whether voluntary or not, lasts up to seven years and can dramatically lower your credit score. The exact point loss depends on your current credit history and score, but you could lose around 100 points or more after reporting a repo.

One of the more serious side effects of a recent repossession of your credit reports is that most traditional and subprime auto lenders typically don’t approve you for financing for up to 12 months after it is reported. After a year, your loan options begin to open again, provided you haven’t reported any other major defaults.

The good news is that anything on your credit reports loses some of its effectiveness over time. With each passing year, that repossession has less of an impact on your overall credit score.

But, if a voluntary repo lasts the same time as a traditional repo, why not just wait for the repo and keep the car as long as possible?

Benefits of voluntary repossession

There are four main advantages of returning your car over waiting for the company to collect the trailer:

  1. Control – A voluntary repossession puts you in control. You can let your lender know that you are voluntarily returning the vehicle to the dealership, remove your foreclosures, and plan your next steps at your own pace.
  2. Convenience – If you wait for the breakdown company to collect your car, they can come pretty much anytime or anywhere: your workplace, your home or even while you are shopping. If the recovery company collects your vehicle with your personal effects inside, you must find a time to go to the place where the vehicle is stored and collect your belongings, since they do not have to bring you. send.
  3. To save money – Another advantage of giving up your car yourself is that you don’t have to pay the lender for the salvage company fees. When a lender hires a repo company, you are responsible for paying the bill. If you skip this step, that’s one less cost to worry about.
  4. Look better – When it comes to your future credit opportunities, a voluntary repossession may look better to future auto lenders than a traditional repossession. This could be seen as accepting the fact that you couldn’t keep the car any longer, and instead of waiting for a pension company to come in, you took control of the situation instead of dragging out the process.

What are my auto loan options after repossession?

As we mentioned earlier, most auto lenders do not consider financing borrowers if they have a repossession that is less than a year old. However, there are dealers who may be willing to work with you.

The Buy here pay here (BHPH) dealership may ignore the credit check, which means your recent repo will not affect your eligibility for a car loan. Often the most important factors in the eyes of a BHPH dealer are your income, who you are, and the amount of your down payment.

BHPH dealers use internal financing, so they take care of all car buying and financing themselves. In terms of vehicle options, used cars are what you are limited to.

You might be wondering what the “catch” is with a dealership that doesn’t check your credit – and you’d be right to ask. Auto lenders check credit scores to see your borrowing history and use it to assign your loan interest rates.

BHPH dealers who ignore the credit check typically award higher than average interest rates to compensate for the fact that they don’t review your credit history or score. You may also need to allow for a 20% down payment at a BHPH dealership, which is another way to make up for the lack of a credit check.

While BHPH dealerships can have some drawbacks, if you can’t afford to buy a vehicle with cash, these dealerships could be your answer to a car while you wait for repossession to loosen its grip on your car score. credit.

Before you go …

If you are about to voluntarily give up your car, we recommend that you call your car lender. Believe it or not, lenders also want to avoid repossession. Some lenders offer deferral programs or auto loan remedy opportunities. Contact your lender before you return your car to see if there is another way, and the sooner you act, the better your chances of getting a favorable outcome.

If your lender can’t help you and you no longer want the vehicle, it may be time to trade it in for something else. And if you’re worried that bad credit is hampering your auto loan possibilities, then work with us at Auto Express Credit. We have developed a nationwide network of special finance dealers who help borrowers in many difficult credit situations, and we want to help you too.

Fill out our free auto loan application form and we’ll find a local dealership that’s equipped to handle bad credit. There are never any fees or obligations, so get started right away.

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