How to Write a Letter of Voluntary Repossession

A voluntary repossession is when you finance a purchase, stop making payments on it and then give the purchased item back to the lender before they repossess it forcefully. If you know you won't be able to make the payments on a secured loan, then writing a voluntary repossession letter is a way to inform your lender that you can't make your payments, and that you wish to give the item back.

Start the letter by identifying yourself and the property. The lender will need to identify your loan, so include an account number. Give them your name, address and contact information.

Tell the lender that you are voluntarily giving the item back because you can no longer make the payments. Let the lender know that you have no interest in making alternative payment arrangements and would rather give the item up.

Avoid getting into details of why you can no longer make your payments. The reason doesn't matter to your lender and it will only open the door for confusion if your letter gets off track. Keep it as simple and straightforward as possible.

Tip

Call the lender to find out where you can safely drop off the item. You don't want to leave it somewhere to get lost or stolen. You can drop off the letter with the item or send the letter by mail. If you send the letter by mail, request a signature confirmation so that you will have proof that the lender received it.

Warning

Even if you voluntarily give the item back, you are still responsible for the remaining balance. If the lender is able to resell the item, then you will only be responsible for the amount that is left after the sale. This is known as the deficiency balance. For example, if you return a car with a £6,500 loan and the lender sells it at auction for £3,250, then you only owe the remaining £3,250.

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