Do Car Loans Hurt My Credit Score?

Todd Maxham
Jul 11 · 2 min read

Yes, it will hurt your credit when you get a car loan and you surrender your car instead of paying off the loan. This will not change the fact that you did not pay off the loan as expected and your lender will most likely report the debt as delinquent.

Even if your lender doesn’t repossess the car and you make the decision to surrender the car on your own it will still count most likely as repossession by your lenders. This will not reflect positively on your credit report and it will make your credit score tank beyond what you can imagine. Especially if your lender reports directly to the credit bureau.

Why not sell off your car when you need cash? This will be better for your credit and finances. If you sell your car you can get something in the region of what you are borrowing from your lender, and you can even get more depending on who is buying the car. You can check our list of reputable sites where you can sell your car online. List your car for sale and in no time, you will get a buyer. Get the money and sort your needs, this will not hurt your credit in any way.

Having bad credit is bad enough, not to think of having your car surrendered to your lender or being repossessed by your lender. This can affect your credit score adversely. When you need cash and you think you will run into more troubles by going for a car loan, it is better to sell your car.

A car loan is good for those who have a steady source of income with which they can repay their lender on time to avoid repossession. As a matter of fact, going for a car loan should be your last option when you are in need except if it is an emergency and you can’t get to borrow money from other places.

In conclusion, surrendering your car to your lender will hurt your credit greatly. Try as much as possible to avoid such a scenario. Sell your car instead and when you are in good financial standing, you can buy a new car. This is better than surrendering your car or your car being repossessed by your lender. Learn more at https://www.nerdwallet.com/blog/loans/best-car-loans-for-good-fair-and-bad-credit/

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