Can I Give Back My Car To My Finance Company

Options available

When it comes to being stuck with a car you can no longer afford, the first thought that comes to mind is: “Can I give back my car to my finance company?” While this may seem like the only available option, there are actually several different strategies that may be worth considering before handing over the car’s keys. For those who find themselves in this situation, this article outlines a number of ways in which they can approach it, as well as considering the pros and cons of each.

In this situation the most significant factor to consider is the overall balance of the loan. The finance company holds the title to your car until you have paid the loan off in its entirety. If this is the case and the loan hasn’t been paid in full, then the easiest approach is to simply make arrangements with the finance company to pay back the remainder. This can include making a payment arrangement in which you make a few smaller payments over a period of time, in order to make it more manageable.

One of the other potential options is called a voluntary repossession or ‘voluntary surrender’. This involves the owner voluntarily handing over their car to the finance company instead of going through the legal process involved in repossession. Depending on the deal made with the company, this may result in a lower balance due or even a complete write off of any remaining debt. However, it is important to be aware that there will still be a negative entry on your credit report, so it’s best to be certain that this is the best option for your circumstances.

If the balance on the account has already been fully paid and the finance company still has the title of the car, then the process is a lot simpler. All that needs to be done is for the finance company to sign over the title of the car to the owner and the loan agreement can be fully discharged. This usually does not take a long time and is often much less daunting than any of the other available options.

Finally, a short sale may also be worth considering. This entails selling the car for less than the total owed and using the proceeds to pay the remainder of the loan balance. However, this is certainly not the best option in all cases and should be carefully weighed up against the alternative options, as it may still have a negative effect.

Benefits & Drawbacks

Another important factor to consider when trying to figure out what your options are is to weigh up the potential benefits and drawbacks of each possible solution. Depending on your individual situation, some of the potential benefits of giving back your car to the finance company may include being able to avoid further interest payments or fees, or even saving on the ongoing costs associated with running and maintaining a car. In the short-term, these can undoubtedly make the process more manageable for the individual.

On the flip side, however, this does come with some drawbacks. Of course, there is the obvious one of no longer having a car. Not only will this cause inconvenience in terms of getting to places and running daily errands, but it can also be devastating emotionally. Driving a car often gives us a tangible feeling of freedom and status, now it will all be gone. In addition to this, there is also the potential problem of a negative mark on the owners credit rating which could lead to problems gaining finance for any new purchases in the future.

Pros & Cons of Each Solution

Whichever solution one decides on, there will always be pros and cons to consider. For the option of making payment arrangements with the finance company, the key benefit is that this avoids the shame of repossession, as well as the associated knock-on effect this can have on the individual’s credit score. In most cases, the finance company can often agree to a payment plan which is within the individual’s budget and allows them to remain financially stable.

The major downside of this option is that it still requires the individual to come up with the payments on a regular basis. This can be difficult if the individual’s financial situation is already tight, meaning that they may have to make sacrifices in other areas of their daily routine. Furthermore, if the individual is not able to keep up with the payments, then they may still find themselves in the position of repossession.

Voluntary repossession and the shorter sale option both share a similar benefit in that they allow for a partial or full write-off of the balance of the loan. Ultimately this depends on any arrangements made with the finance company, but if successful, this can offer a great deal of financial relief. Both of these options also come with risks, as it could still result in a negative effect on their credit score, affecting their ability to get credit in the future. It is also worth considering that with a short sale, the balance of the balance may still be more than the proceeds of the sale, causing a deficit for the individual.

Selling the Vehicle

As an alternative, instead of giving the car back, the individual could consider trying to sell the car privately. In this situation, the individual would receive a cash payment for the car, which could then be used to make a final payment on the loan. This requires a bit more time and effort than the other options, but it could be the most efficient way to come out of the situation. However, it is important to keep in mind that this would almost always require the individual to hire a professional to assist with the sale, meaning that the costs associated with this may not be worth it.


Finally, there is the option to trade-in the car with a dealership. This involves selling the car to the dealership and then using the money to put towards the purchase of a new car. This is a great way to get a new car and may also be more beneficial in terms of the dealer’s depreciation policy, which means that the value of the car decreases at a slower rate than if it was sold privately. The downside to this is that it is often difficult to get the best price for a trade-in, and the money gained from this may not be enough to cover the remaining balance of the loan.

The Impact on Credit Score

When it comes to giving a car back to a finance company, there is also the potential impact on an individual’s credit score. As the car loan will end abruptly and the individual will no longer be making the agreed payments, the credit score could be negatively impacted. This could potentially affect their ability to obtain credit in the future, and may be an important factor to consider before going ahead with any of the solutions outlined above.

Alternative Solutions

In addition to the options above, there are a number of other alternative solutions that may be worth considering. One of these is to refinance the loan with a new lender. This is a great way to potentially lower the monthly payments, or even extend the length of the loan to lower the overall payment. This could be particularly helpful for those who are struggling to keep up with the agreed payments.

Another option is to look into public assistance and hardship programs which can help to reduce monthly payments and make maintaining the loan a bit more realistic. It is also possible to speak to a debt adviser, who can provide support and advice on all of the available options, as well as what may be the best option in a given situation.

Finally, there is the potential of bankruptcy. Requesting a discharge of debt can have a dramatic effect on a credit score, and should only be considered as a last resort. This is because it is a long and difficult process and can take a number of years to get back to a decent credit score.


Ultimately, there are a number of options available when it comes to giving back a car to a finance company. This decision should only be made once the individual has considered the potential impacts and worked out which option is the most suitable for their individual situation. It is also important to remember that there are still potential financial costs associated with this process, so it is best to seek advice from a debt advisor or professional expert in order to get the best possible outcome.

Marjorie Turcios is a seasoned leader and management expert with over 25 years of experience. She has held various leadership positions in private industry, government, and education. She is an advocate for creating win-win solutions and has worked to create successful, lasting change in corporations and organizations. Marjorie is an award-winning author of several books on leadership, mentoring and coaching, and effective communication skills. Her passion is to help others discover their potential and reach new heights in their professional life through her writings. Marjorie resides in Dallas, Texas where she enjoys spending time with her family, traveling to different places around the world, and speaking at conferences about her areas of expertise.

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