What Is It Called When You Turn Your Car In?

Most people mean a “trade‑in” when they say they’re turning a car in, especially if they’re giving a vehicle to a dealer toward another one. If you’re returning a leased vehicle at the end of its term, it’s a “lease return” or “lease turn‑in.” If you’re giving a financed car back to the lender because you can’t keep up payments, it’s a “voluntary surrender” (also called voluntary repossession). The right term depends on whether you own, lease, or still owe money on the car and what outcome you want.

The Main Terms You Might Mean

“Turning in” a car is a catch‑all phrase. These are the specific scenarios it can describe, each with different rules, costs, and consequences.

• Trade‑in: You give your car to a dealer as part of buying another vehicle, and its value reduces the price or down payment.
• Lease turn‑in (lease return): You return a leased car at the end of the lease; you may owe fees for wear, damage, or extra miles.
• Voluntary surrender (voluntary repossession): You hand a financed car back to the lender because you can’t make payments; it hurts credit and can leave a balance due.
• Early lease termination or transfer: Ending a lease before term, or transferring it to another qualified lessee.
• Straight sale to a dealer/online buyer: You sell the car for cash without buying another one.
• Consignment: A dealer sells your car on your behalf for a fee.
• Junking/salvage: You sell a non‑viable car to a recycler or dismantler.
• Donation: You give the car to a charity, potentially for a tax deduction.

Understanding which scenario applies helps you predict costs, paperwork, and credit or tax impacts before you hand over the keys.

How Each Option Works and What It Means for Your Wallet

Trade‑in

With a trade‑in, a dealer values your car and applies that amount to the deal on your next vehicle. If you still owe money, the dealer gets a payoff quote and pays the lender; any equity reduces your price, and any negative equity is often rolled into the new loan (raising your payment). Many U.S. states offer a sales‑tax credit on the trade‑in value, which lowers the taxable purchase price. Always request a written, time‑bound payoff (often a 10‑day payoff) from your lender and compare trade‑in offers to instant cash offers to be sure you’re getting market value.

These quick tactics help maximize your trade‑in value.

• Get two to three competing instant cash offers (dealers/online buyers) as leverage.
• Fix inexpensive cosmetics (deep clean, minor bulbs/wipers); skip costly repairs unless they clearly add value.
• Bring maintenance records, spare keys, and accessories; they can bump the offer.
• Know your equity: compare payoff to realistic market value, not just asking prices.

A few simple steps greatly improve your negotiating position and reduce surprises when numbers are finalized.

Lease Return (End‑of‑Term Turn‑in)

At the end of a lease, you return the vehicle after a pre‑return inspection. You may be charged a disposition fee, excess wear‑and‑tear, and mileage overage. Some brands waive fees if you lease another vehicle with them. If your buyout price is below market value, you might purchase the car and keep or resell it for potential equity.

Expect some or all of these items at lease turn‑in.

• Pre‑inspection report detailing wear, tires, windshield, and needed repairs.
• Mileage calculation vs. your contracted allowance; per‑mile overage if exceeded.
• Disposition (turn‑in) fee unless waived by loyalty or promotions.
• Charges for missing items (spare key, charging cable for EVs, cargo covers).
• Option to buy the vehicle at the residual (plus fees/taxes) if permitted.

Review your lease agreement 60–90 days before maturity to decide whether to return, buy, or extend, and to schedule any repairs or tire replacements that avoid bigger penalties.

Voluntary Surrender to Lender

When payments are unaffordable, you can arrange a voluntary surrender with your lender. It still counts as a repossession on your credit report, typically damaging your score and remaining for up to seven years. After auction, you’re billed for a deficiency balance (the gap between what’s owed and the sale price), plus allowable fees; GAP coverage may help if included in your contract and conditions are met.

If you must surrender, these steps can reduce the fallout.

• Call your lender early to ask about hardship options (deferrals, refinance) or selling the car yourself to pay off the loan.
• Request the surrender process in writing, including where and when to deliver and what fees may apply.
• Remove personal items and keep copies of the condition and odometer at handoff.
• Monitor for the post‑sale accounting and negotiate or arrange a payment plan for any deficiency.

While less damaging than an involuntary repo in terms of fees and logistics, a voluntary surrender still hurts credit; exhausting alternatives first is usually wise.

Selling Your Car to a Dealer or Online Buyer

You can “turn in” your car for cash without buying another one by selling to a dealership or online buyer offering instant offers. If you have a loan, the buyer typically handles the payoff and pays you the equity. Compare multiple offers the same day; market prices can shift quickly, and offers often expire within 7–10 days.

Junking/Salvage or Donation

For cars too costly to repair, salvage buyers pay based on scrap and parts value; you’ll sign the title as salvage and return plates per state rules. Charitable donations may yield a tax deduction, usually limited to the charity’s sale price of the vehicle; keep the IRS‑required acknowledgment for your records.

Documents You’ll Usually Need

Having the right paperwork ready speeds up any turn‑in scenario and prevents last‑minute delays at the dealership or lender.

• Driver’s license or government ID.
• Vehicle title (or lender/lessor information for payoff or lease return).
• Current registration and proof of insurance (as required).
• All keys/fobs, owner’s manual, accessories (e.g., EV charging cable).
• Loan payoff letter with per‑diem interest; account number and lender contact.
• Maintenance records and receipts for recent repairs or tires.
• Any required power of attorney forms for title transfer if the lender holds an electronic title.

Call ahead to confirm state‑specific title and notarization requirements, name matches, and whether any liens need to be formally released before transfer.

Taxes, Timing, and Consumer Protections (U.S.)

The financial impact of turning in a car can change with state tax rules and program terms. A few issues commonly affect costs and timing.

• Sales‑tax credits on trade‑ins exist in many states, reducing the taxable amount of your new purchase.
• Odometer disclosures and title branding rules apply at sale/transfer; complete them accurately to avoid legal issues.
• Cooling‑off periods generally do not apply to car purchases; once you sign, you’re typically committed.
• Open safety recalls may need repair before a dealer can resell; it usually doesn’t block a trade‑in but can affect value.
• Early sale or lease termination may trigger clawbacks on certain state EV rebates; check your program’s minimum ownership/lease term.
• Plate surrender, registration refunds, and local property tax proration vary by state; ask your DMV about refunds or deadlines.

A quick call to your DMV or a review of your state’s revenue department website can prevent avoidable taxes or fees and help you time the transaction well.

Quick Decision Guide

Use this simple flow to match your situation to the right term and next step.

1. If you’re buying another car now and want to apply your current car’s value, it’s a trade‑in. Get multiple offers and confirm loan payoff.
2. If your lease is ending, it’s a lease return. Schedule inspection, review fees, and decide whether to buy, extend, or return.
3. If you can’t afford payments on a financed car, consider selling it to pay off the loan; if not feasible, discuss voluntary surrender with your lender.
4. If you just want to be done with the car without buying another, pursue a straight sale to a dealer or online buyer.
5. If the car is beyond economical repair, consider salvage/junking or donation with proper title handling.

Choosing the right path can save money, protect your credit, and simplify the handoff.

Bottom Line

“Turning your car in” usually means a trade‑in, a lease return, or a voluntary surrender—each with different financial and credit consequences. Identify your scenario, gather documentation, get competing offers, and understand fees or tax effects before you hand over the keys.

Summary

Turning in a car is most commonly a trade‑in at a dealership, a lease turn‑in at lease end, or a voluntary surrender to a lender if payments are unmanageable. Trade‑ins can lower taxes and your next car’s cost; lease returns may involve wear‑and‑tear and mileage fees; voluntary surrender harms credit and can leave a deficiency balance. Prepare paperwork, compare offers, and check state rules to minimize costs and surprises.

Is a surrender better than a repo?

Yes, a voluntary surrender is generally considered better than a forced repossession because it gives you more control, potentially avoids towing and storage fees, reduces emotional stress, and can have a slightly less negative impact on your credit score. However, both options significantly harm your credit and still leave you responsible for any remaining loan balance after the vehicle is sold. 
Benefits of a Voluntary Surrender

• More Control: You decide when and where to return the vehicle, allowing you to remove your personal belongings and make arrangements in advance. 
• Fewer Fees: You can avoid towing and storage fees associated with a forced repossession, which are often your responsibility. 
• Reduced Stress and Embarrassment: You have more control over the process, avoiding the potential stress and embarrassment of having your car taken from your home or workplace without warning. 
• Slightly Better for Credit: While both options are negative, a voluntary surrender shows you worked with the lender and took responsibility, which may be viewed slightly more favorably by future lenders than a forced repossession. 

Downsides of Both Options

• Negative Credit Impact: Both a voluntary surrender and a forced repossession will significantly harm your credit score. 
• Remaining Debt: You are still responsible for any difference between the vehicle’s sale price and the remaining balance on your loan. 
• Last Resort: Because of the lasting damage to your credit, a voluntary surrender should be a last resort, and you should explore other options first. 

Alternatives to Consider
Before surrendering your vehicle, you may want to consider: 

• Negotiating a loan modification with your lender.
• Refinancing your loan for more affordable terms.
• Selling the car yourself to pay off the loan.
• Paying off the loan early if possible.

How badly does a voluntary repo affect you?

A voluntary repossession significantly hurts your finances by severely damaging your credit score, remaining on your credit report for up to seven years, and often leaving you responsible for a deficiency balance—the difference between the car’s sale price and the amount owed. While it’s less stressful and potentially less damaging than a forced repossession, you still face a difficult path to getting future credit, likely with higher interest rates and less favorable terms. 
Credit Impact

• Credit Score Drop: A voluntary repossession will cause your credit score to drop significantly, potentially by about 100 points, depending on your previous credit history. 
• Derogatory Mark: The repossession will appear as a negative, derogatory mark on your credit report for up to seven years, starting from the date you stopped making payments. 
• Difficulty with Future Credit: The negative mark makes it harder to qualify for future loans and may result in higher interest rates and less favorable terms. 

Financial Consequences

• Deficiency Balance: You are typically still responsible for the remaining balance on the loan after the vehicle is sold, known as the deficiency balance. 
• Collections: If you don’t pay the deficiency balance, the lender can sell the debt to a collection agency, which can further harm your credit and potentially lead to legal action. 

Potential Benefits (Compared to Involuntary Repossession) 

• Less Stress: You avoid the emotional distress and potential unpredictability of a forced repossession.
• Control Over the Process: You have control over when and where the vehicle is returned, allowing you to remove your personal belongings.
• Fewer Fees: You may avoid some costs associated with involuntary repossession, such as towing and storage fees.

Key Takeaway
A voluntary repossession is a severe last resort that, while preferable to a forced repossession, still leaves a significant negative mark on your credit and can result in substantial financial obligations. It is crucial to contact your lender to explore all alternatives before surrendering the vehicle.

What is the process of turning in your car?

Voluntarily surrendering a car involves informing your lender that you can no longer make payments and intend to return it. Empty your car of all personal items and arrange the time and place to drop off your car and hand over the keys.

What is it called when you turn on a car?

Ignition Switch
When the switch is engaged, or you turn your keys, it sends a signal to the starter relay, telling the starter motor to engage and turn over the engine, beginning the car’s internal combustion process.