I have a 2017 Honda with approximately $19,500 left on my loan. I purchased this car a year ago from a buy here pay here dealership because I didn’t have any credit at the time. Unfortunately, I’ve realized that the monthly payment of $635 is quite high, and I’m considering a voluntary return of the vehicle. My concern is whether they can harm my credit by marking it as a repossession.
Specifically, since this dealership hasn’t reported any of my monthly payments to the credit bureaus over the past year, can they still label my voluntary return as a repossession on my credit report?
I’ve been consistently making my payments, but I feel like I’m not receiving any credit benefits from them. It seems unjust for them to negatively affect my credit when they haven’t contributed to building it previously. Has anyone had a similar experience? What should I anticipate if I proceed with the voluntary return?
Absolutely they can report it. BHPH dealers operate under what I call the “heads I win, tails you lose” model. They skip monthly reporting because it costs them money to submit to credit bureaus, but they’ll definitely report repos, charge-offs, and collections when you default. It’s completely legal and unfortunately very common in that industry.
Your situation is exactly why I tell people to avoid BHPH unless there’s literally no other option. You’re paying premium interest rates without getting the credit building benefits. That $635 payment on a 2017 Honda suggests you’re probably locked into something around 24-28% APR, which is brutal.
Before you surrender, get the car appraised at a few places like CarMax or Carvana. If it’s worth close to your balance, selling privately could save you from the credit damage entirely. BHPH lots typically send repos to wholesale auctions where they sell for much less than retail value, leaving you with a hefty deficiency balance.
If surrender is your only option, voluntary is better than involuntary repo, but both will tank your credit for 2-3 years. The real kicker is they’ll probably still come after you for whatever’s left after auction, plus their fees and costs.
This is actually a pretty common misconception with BHPH dealers. Just because they weren’t reporting your positive payment history doesn’t mean they can’t report negative events like repos or charge-offs. Most buy here pay here lots operate this way - they’ll skip the monthly reporting to save on costs but will absolutely report derogatory marks when things go south.
The reality is that $635 on a 2017 Honda with $19.5K remaining sounds like you’re probably dealing with a high interest rate situation, which is typical for BHPH financing. With current market conditions, used car values have been pretty volatile, so you might want to check what that Honda is actually worth before making any moves.
Voluntary surrender vs repo might show up slightly differently on your credit report, but both are going to ding your score pretty hard. The main benefit of voluntary return is avoiding the drama and potential additional fees from the actual repossession process. Either way, you’ll likely still be on the hook for any deficiency balance after they auction the car.
Have you tried talking to them about restructuring the payment? Some BHPH dealers are willing to work with customers, especially if you’ve been consistent for a year. Might be worth exploring before taking the credit hit 
Yeah they can absolutely report the repo even if they never reported your payments. I learned this the hard way with a different BHPH place a few years back. They don’t report the good stuff to save money but they’ll sure as hell report when you default or surrender.
That payment does sound brutal though. $635 on a 2017 Honda is rough, especially if you’re not even getting credit building out of it. I’m guessing you’re probably looking at something like 22-25% interest? Those places really get you when your credit is shot.
One thing to consider is what that car is actually worth right now. Used car market has been all over the place lately. If it’s worth close to what you owe, you might be better off trying to sell it privately and pay off the loan that way. Avoid the whole repo situation entirely.
But honestly, if you can’t afford the payment and can’t sell it for enough to cover the loan, voluntary surrender might be your best bet. It’s still gonna hurt your credit but at least you won’t have repo fees and storage costs piled on top. Just know you’ll probably still owe whatever’s left after they sell it at auction, and those auction prices are usually pretty terrible.
Have you looked into refinancing anywhere else? After a year of payments your credit might be good enough now to qualify somewhere with better rates.