What happens if I cancel my car finance within 14 days?
Nothing serious will happen if you cancel your car finance agreement within 14 days. Under the Consumer Credit Act 1974, you have the right to withdraw from the agreement without penalty. The lender will cancel the finance, and you will only need to repay the amount borrowed along with any interest accrued during that period. However, cancelling the finance does not automatically cancel the car purchase. If you have already taken possession of the vehicle, you must arrange another way to pay for it or check if the dealer will accept a return. If you still need financing for a new vehicle, you can find bad & poor credit car finance options to secure a suitable deal based on your circumstances.
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 have a 14-day cooling-off period that allows you to withdraw from the finance agreement without penalty. This right applies from the day you sign the contract or from when you receive a copy of it, whichever comes later.
To cancel within this period, you must notify your lender in writing or by phone. However, cancelling the finance does not automatically cancel the car purchase. If the car was bought using hire purchase (HP) or personal contract purchase (PCP), you will need to arrange another way to pay for it unless the dealership agrees to take the vehicle back.
For agreements over £60,260, the right to withdraw usually does not apply. Checking the terms of your contract is essential to confirm whether your agreement is covered by the Consumer Credit Act.
Can I cancel a car finance agreement after 14 days?
Once the 14-day cooling-off period has passed, cancelling a car finance agreement becomes more complex. The options depend on the type of finance and how much has already been repaid.
For HP and PCP agreements, you cannot simply return the car and walk away. If you want to end the contract early, you must either settle the finance in full or consider voluntary termination if you have paid enough towards the loan.
For personal loans, which are not secured against the car, you can pay off the remaining balance early, but interest charges may still apply. Some lenders charge early repayment fees, so checking the loan terms before proceeding is advisable.
Before cancelling your car finance, it’s advisable to perform an outstanding finance check for the car to ensure there are no existing financial obligations tied to the vehicle. This can help you avoid any potential issues when returning or reselling the car.”
Pay half the amount you owed
If you no longer want to keep the car but cannot pay off the full balance, you may be able to end the finance agreement through voluntary termination. This is a legal right under the Consumer Credit Act, allowing you to return the car if you have repaid at least 50% of the total amount payable.
The total amount payable includes the loan amount, interest, and fees, not just the car’s price. If you have not yet reached this 50% threshold, you will need to cover the remaining amount before the lender agrees to terminate the agreement.
Voluntary termination can be useful if you no longer need the vehicle or can no longer afford the repayments. However, the car must be in good condition when returned, as the lender may charge for excessive wear and tear or any required repairs. Keeping records of all communication and payments when using this option is recommended to prevent future disputes.
Can you return a car on finance within 14 days?
Cancelling a car finance agreement within 14 days does not necessarily mean you can return the car. The cooling-off period allows you to withdraw from the finance agreement, but it does not guarantee that the dealership will accept the car back.
If the vehicle was purchased online or over the phone, the Consumer Contracts Regulations 2013 may apply, giving you 14 days to return the car. However, if the car was bought in person at a dealership, returning it is usually only possible if the dealer agrees.
If you have already taken possession of the car and the finance is cancelled, you will need to arrange an alternative payment method. The dealership may offer another finance agreement, but this will involve a new credit application and affordability assessment.
What happens if I cancel my car finance within 14 days? Does it harm my credit rating?
Cancelling car finance within 14 days does not negatively impact your credit score, as long as it is done correctly. The agreement will be recorded on your credit file, but it will not be marked as a default or missed payment. Since no long-term commitment is made, lenders do not typically view a cancelled agreement as a negative factor when assessing future applications.
However, multiple finance applications within a short period may raise concerns for lenders. If you cancel one agreement and immediately apply for another, each credit check will be recorded, potentially affecting your ability to secure new finance.
If you are struggling with repayments after the cooling-off period, voluntary termination may be a better option than defaulting on the loan. A missed payment or default can significantly impact your credit rating, making it harder to obtain finance in the future.
Will I get my deposit back if I cancel my car finance agreement within 14 days?
Whether you get your deposit back depends on the terms of the finance agreement and how the car was purchased. In most cases, lenders will refund any upfront payments, but you may still be responsible for any interest accrued during the period before cancellation.
If the deposit was paid directly to the dealership, rather than the finance company, the refund policy may vary. Some dealers may deduct administration fees or charges for vehicle use. Checking the contract terms before requesting a refund is recommended.
If the finance was cancelled before taking possession of the car, the full deposit is usually refunded. However, if the car was already delivered and used, the dealership may charge for mileage and any depreciation in value.
Conclusion: Should you cancel car finance within 14 days?
Cancelling a car finance agreement within the 14-day cooling-off period is legally allowed and will not harm your credit score, but it does not automatically cancel the car purchase. If you have already received the vehicle, you must arrange another way to pay for it or check whether the dealer will accept a return.
If the cooling-off period has passed, voluntary termination may be an alternative if you have repaid at least 50% of the total amount payable. For those unable to meet repayments, seeking advice early can help prevent financial difficulties and protect your credit rating
