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Can I Cancel a Loan Agreement?

Can I Cancel a Loan Agreement?

There you are, you’ve decided on a major purchase, maybe a car, home improvements or repairs, the holiday of a lifetime, or a limited time offer or sale, and you’ve decided to finance the purchase, so you take out a loan.

You apply for and are approved for the loan you need. The deal is sealed.

Then for some reason, be it “buyer’s remorse”, or you find a better deal, a better loan rate or better loans terms, you want to cancel the first loan agreement.

Can you cancel a loan agreement, and if so, how do you do this?

There are some factors and time-frames that are involved in cancelling a loan agreement, but the fact is that loan agreements can be cancelled. However, you will need to be aware of the conditions to do this.

All loans and agreements have terms and conditions, and in most instances there are certain aspects of the loan that needs to be explained to us, prior to entering into the agreement. However, with all the traffic on the Internet, as consumers making purchases, and also banking and taking out loans, there can be times when we may miss an aspect of the terms and conditions, and change our mind about the loan.

The loan we have already agreed to.

Cooling Off Period

Here in the UK we have what is termed a “cooling off period” when we enter into a contract for services with a company.

This cooling off period is usually 14 days from the date you agree to enter into the contract for the service.

During this cooling off period of 14 days, you can contact the provider, usually best in some form of writing/email, and they will refund your money, or not begin drafting payments for the service.

The 14 day cooling off period does not pertain to the following services:

* Hotels (short-term stays)

* Courier services or other transporting of goods

* Car hire

* Catering

But what about a loan agreement, does this cooling off period apply?

Yes, the same 14 day cooling off period applies, but with some slight variations.

And this includes loans or credit cards you may have taken out online, via the phone, but may not include taking out a loan in person. Meaning if you walk into a bank, request a loan and are approved, you may not have the same rights as you would if you took out a loan online.

However, you still have a cooling off period even if you walk into a lender’s premise and take out a loan, but that cooling off period os less, just five (5) days.

So you can still cancel the loan agreement.

One other area that the cooling off period does NOT cover, are loans over £60,260. So mortgages would not be covered under the 14 day cooling off period.

So what happens after the cooling off period if you wish to cancel a loan agreement?

In some instances you can just give the money back, paying the loan in full. If there were to be any interest that has accrued during the time you had the money, you could and probably would be held responsible to pay this.

Consider it the price you pay for changing your mind.

Of course if a loan has been mis-sold or something about the loan misrepresented, you do have recourse via the FOS/Financial Ombudsman Service.

HP/Hire Purchase Agreements

Hire Purchase agreements for cars, or other items, are covered under the same 14 day cooling off period, but also have some unique cancellation aspects to them.

If you have paid half or more of the payments set out in an HP agreement, you can return the item, be it a car, or other item you have purchased.

Some examples may be this:

You have bought a 3 piece suite under an HP agreement and the term of the agreement is 24 months. After 12 months you no longer can afford the payments, since you have paid half the agreed payments, you can return the suite, and are no longer obligated to make any future payments.

In the same example, you have a HP contract for 24 months, but after 6 months feel you can no longer afford the payments.

You will need to pay 6 payments to bring the total to 12 payments, which is half the agreed payments, in order to return the item.

If the payments are £25 a month, you would need to pay £150 in order to return the item.

As we can see, there are ways to cancel or get out of a loan agreement if we need to, however, it is always best to be 100% sure prior to entering into the agreement.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
 
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”https://www.paydaybadcredit.co.uk/direct-lender/” data-mce-href=”https://www.paydaybadcredit.co.uk/direct-lender/”>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html” data-mce-href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html”>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”https://www.gov.uk/county-court-judgments-ccj-for-debt” data-mce-href=”https://www.gov.uk/county-court-judgments-ccj-for-debt”>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.