If there's been a change in your car purchase plans and you no longer require a loan, there is a 2 week period in which it is possible to withdraw your application for car finance
It doesn’t matter whether you applied by phone, online, or offline in the office. Either way, you are offered a 2-week cooling-off period from the financing agreement according to the Consumer Credit Act. Therefore, you can always count on cancelling car finance within 14 days of the lender's approval.
Those 14 days in the cancelling terms apply to every car financing agreement worth £25,000 or less. If your contract is of a higher total value, check its terms and conditions to learn if you can cancel it. Moreover, bear in mind that there is no withdrawal for any loan agreement over £60,260.
In the event when you do not want to finish your finance agreement and decide not to keep the car, there is a perfect option - you may repay half of 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 period.
At any point, as long as you have paid 50% of your loan amount, you are free to terminate the agreement and return the car to the lender. Such finance cancellation can be beneficial in numerous cases:
However, if you plan to use this option, make sure 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 it before cancelling yours. Therefore, you should apply to a trustworthy car repairer in advance to fix any damages and prepare the car for return.
If you are still on the way to a 50% payout 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 end the car finance agreement 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.
Cancelling the car financing deal as long as it is done in agreement with the lender will not harm your credit report. Termination will be reported in your credit history. Yet, it does not negatively affect your rating. So, you will be able to apply for financing in the future without a problem.
That is why it’s better, when experiencing financial problems, to reach the 50% point, return the car, and close the car finance deal rather than failing to pay off the debt fully. The latter case, without a doubt, will affect your credit score negatively and cause future problems.
There are certain peculiarities in regards to returning a car as well. If you purchase a car at the office of a car dealership and sign a vehicle order form, you are to pay it in full within the given 14 days or other period mentioned in the agreement. The special order form serves as a binding contract.
However, there are the following exceptions:
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 cooling-off period and can use your car finance to get the vehicle of your dreams.