If my car gets repossessed, does that end my obligation?
Question Details: I bought a car and recently have had some hard economic times, I just cannot afford the payment of the car anymore are there for one to give them a voluntary repossession or would it be better just to have them come get it and do their own repossession the car is in excellent condition, if not better condition than when I bought it. I have no plans of destroying the car before they get it back; I just want to be a gentleman about it and end the loan contract.
It does not legally end your obligation, no. You are obligated for the full principal balance of the loan. When a car is repossessed, then auctioned/sold off, the proceeds of the sale (less certain costs of repossession and sale) is applied against that balance, but if it does not fully pay off the balance, you will still owe what's left. Example: say you still owed $16,000; the current blue book or fair market value is only $13,000, due to depreciation (i.e. the value of a car of that year, make, model, options, condition, and mileage); say that the costs of repossession and sale are $1,000...in this example roughly $12,000 would be applied against the balance of the loan, leaving you owing another $4,000, which the lender/dealership/etc. (whoever provided the financing) could sue you for.
Now, a lender may voluntarily agree to take the car back in full satisfaction of the loan; or even if they don't formally agree, may decide it's not worth their while to sue you for whatever is left over/unpaid--but that's their choice. Legally, they could proceed against you for any amount not paid off or satisfied by the reposseesion.