Can I cancel a car finance agreement within 14 days?

Yes, you can cancel a car finance agreement within 14 days. Under the Consumer Credit Act 1974, you are legally entitled to withdraw from the agreement within this 14-day cooling-off period, but only if certain conditions are satisfied. These include repaying the creditor the amount of credit provided, and the interest accrued on it.

This right applies from the moment you agree to the terms and conditions, and it allows you to cancel without penalty if the agreement is for £25,000 or less.

For a real-world example of how this works in practice, see this Financial Ombudsman case.

However, if your car finance agreement exceeds £25,000, it's important to check the contract's terms and conditions, as the rules may differ. For agreements over £60,260 you typically do not have the right to withdraw your money.

Remember, cancelling the finance agreement doesn’t automatically cancel the car purchase. You may still need to find another way to pay if you want to keep the car.

Can I cancel a car finance agreement after 14 days?

Can I cancel my car finance contract with a lender when the cooling-off period has passed? Yes, you can leave the agreement and cancel car finance now, but only under certain conditions. You may need to pay the penalty if you do so. If you want more information, it's in your best interest to know about the Consumer Credit Act.

Or, if you are past the 14-day period, consider car refinancing options. A refinance car loan might help lower your monthly payments and extend your loan term, allowing you to manage your finances better.

Pay half the amount you owed

If you do not want to cancel your car finance agreement early and decide not to keep the car, there is a perfect option - you may repay half the loan and return the vehicle. Such an option is delivered by the Consumer Credit Act and grants a reasonable possibility to cancel the financing contract within an earlier notice period.

At any point, as long as you have paid 50% of your loan amount, you can terminate the agreement and return the car to the lender. Such finance cancellation can be beneficial in numerous cases:

• You no longer require your vehicle.
• Your income conditions changed, and you cannot afford further repayment.
• You need cuts to your monthly expenditure cuts and are trying to lessen your debt.
• You plan to get a better deal with another lender.

However, if you plan to use this option, ensure that the car's condition is proper for further resale. You are responsible for returning the vehicle in good shape because the lender will not take over any repairs and oblige you to do them before cancelling the finance on the car. Therefore, you should contact and apply to a trustworthy car repairer in advance to fix any damages and prepare the vehicle for return.

If you are still on the way to a 50% payout of the total amount of your debt, you can focus on repaying the remaining amount to reach that level and close the agreement.

Either way, if you decide to cancel your car finance deal with the dealership earlier, make sure to keep all the documents and copies proving the termination. It is important to avoid any confusion in the future if you are accused of not paying off the debt in full.

Can you return a car on finance within 14 days?

You generally cannot return a car on finance within 14 days simply because you change your mind. If you purchase a car at a dealership and sign a vehicle order form, you are typically bound to the contract, which usually requires full payment within the agreed period. This order form acts as a legally binding agreement.

However, there are the following exceptions:

• The car was purchased online or by phone.
• The order form was not signed.
• The car you have differs from the specification.

What we strongly advise is to avoid any irrational or rash decisions. Give yourself time to sleep on it, calculate your finances, and consider your possibilities and options first. Then you will not need to worry about the car finance cooling-off period and can use your car finance to get the vehicle of your dreams.

What happens if I cancel my car finance within 14 days? Does it harm my credit rating?

Cancelling car finance within 14 days will not harm your credit rating as long as it is done in agreement with the lender. The cancellation will be noted in your credit history, but it won't negatively impact your credit score. This means you should still be able to apply for financing in the future without any issues.

However, if you find yourself unable to meet your financial obligations, it's generally better to reach the 50% repayment point, return the car, and close the agreement. This approach avoids damaging your credit score, unlike failing to pay off the debt, which would have negative consequences for your credit rating and could lead to future financial difficulties.

Will I get my deposit back if I cancel my car finance agreement within 14 days?

You may have to make a "deposit" for car finance agreements that are meant to show you're committed. Some people are unsure whether to agree with a car finance plan or terminate it if they change their minds. If you do decide to cancel the car finance credit agreement, the finance company might not have to refund your deposit.

To see if you qualify for a refund, please check the terms and conditions of your contract.