A family member can't afford his loan. The collateral was a car. He would like to approach the lender and turn in the vehicle. What is the best thing to do?
Call the lender first and explain the situation. Turning the car in does two things. It requires the bank to sell it as a repossession, and it will require your family member to pay the bank the difference between what it sells for, and what is owed. When buyers smell a repossession for sale, they offer less, because they know the lender wants it sold. Lenders are not car lots and are not in the business of selling cars.
Try to make the payments, or modified/lower payments if an agreement can be made to sell the car. Then arrangements can be made to repay the difference owed as a personal loan either secured by something else, or unsecured.
In today's economy, cars that are "gas guzzlers" are selling very poorly. If this is one of those, the loss could be greater, but it all depends on the value of the car against what is owed. The car that can't be paid for rarely, if ever, is worth what is owed against it.
If the difference can't be repaid, the lender will likely charge the loan off and attempt to collect it as a bad debt. This could have a negative impact on your relative when he next tries to borrow. Either their cost of credit would be higher, or he would just be denied, so first thing, call the lender!
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Call the lender first and explain the situation. Turning the car in does two things. It requires the bank to sell it as a repossession, and it will require your family member to pay the bank the difference between what it sells for, and what is owed. When buyers smell a repossession for sale, they offer less, because they know the lender wants it sold. Lenders are not car lots and are not in the business of selling cars. 