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What if the lender offers to just take the vehicle back and forgive the loan? Will it affect my credit report?

You must get the lender to state in writing that returning the vehicle fully satisfies your loan; otherwise, you may still be liable on the loan and for any deficiency.

Additionally, you must ask the lender to confirm in writing that it will not report your return of the vehicle to the credit reporting agencies as a “repossession.” Get a full release from the lender if you turn over the vehicle and the keys voluntarily. Unless you take these steps, your returning the vehicle and turning in the keys does not stop the lender from claiming that you owe more money on your auto loan or a deficiency.  A loan delinquency and a repossession will stay on your credit report for seven years from the date of the delinquency or repossession.