When Defaulting On a Loan May Not Be Reported to a Credit Bureau

Q: I found out that my car company Chacon Auto is not reporting my credit after three years. If I voluntary give my car back can they report a repo although they do not report my credit now?

A: Thanks for writing me with your question about your car situation.

It is rare for an auto dealership that offers financing to fail to report a car loan to the credit bureaus. So at first, I wasn’t exactly sure why Chacon Auto has neglected to report your payment history to Equifax, Experian and TransUnion.

Learn the difference between Equifax, Experian and TransUnion credit reports.

I did some quick homework, though, and discovered that Chacon is a not a large company, but rather a family owned business that often provides financing on its own for the cars it sells.

It also specifically lends to people with bad credit, little credit or no credit at all.

So it sounds like like Chacon simply may not see the value in reporting information to the credit bureaus for those with so-so credit. (Or perhaps its customers have never urged the company to report their payment history). Who knows?

In any event, regardless of whether they’ve reported your payments in the past (which have presumably been on time) 🙂 — once you voluntarily give the car back or if they come and repossess it for non-payment, Chacon does have the right to legally report your delinquency and repossession to the credit bureaus.

What is voluntary repossession?

Voluntary repossession is a term used to describe when a consumer voluntarily surrenders property secured by a loan, such as a car or a motorcycle, to the lender that financed the purchase.

In other words, you bring the car back to the lender before they have to send the repo man to take it from you.

The real question are: WOULD they report it and CAN they do it? This is only a guess, but my guess is that they probably would not and likely can not.

I say this only because companies that report to the credit bureaus, also known as credit “furnishers,” have to agree to supply or “furnish” information to the credit bureaus on a consistent and routine basis.

If they don’t meet that requirement, they get cut off by Equifax, Experian and TransUnion and can no longer act as suppliers of credit information.

It sounds like Chacon Auto is not registered as an authorized credit furnisher; if they were, they would surely be reporting your payments.

Therefore, I’m doubtful that they would automatically become one just to report your repossessed loan.

Again, this is only my opinion. Not fact or law. But I just wanted to give you some perspective. Now, I could be wrong, or maybe you can be wrong, and you didn’t look at all 3 credit reports or something, and you didn’t realize that they are – in fact – reporting your car payments.

So please don’t take my opinion to mean “go ahead and turn in your car because they probably won’t report you!”

Frankly, I don’t know what they will do. Nobody does — unless you actually wind up with a repo and then see how and if they respond.

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