Can I cancel my car finance within 14 days?

The right to withdraw

Section 66A of the Consumer Credit Act 1974 lets the debtor under a regulated consumer credit agreement withdraw without giving any reason. You give notice, orally or in writing, before the end of 14 days beginning with the day after the “relevant day”. That is the latest of several dates the section lists, including the day the agreement is made and, where the lender must supply you with a copy of it, the day you receive that copy.

Oral notice has to be given in the way the agreement specifies, and written notice goes to the address, number or email address it names, so use the contact details in your paperwork. nidirect gives the same 14 days and adds that the agreement must explain your withdrawal rights.

What you owe if you withdraw

If you withdraw, the agreement is treated as if it had never been entered into. You must repay the credit you were given and the interest accrued at the agreement’s rate, but you owe no compensation, fees or charges apart from non-returnable charges the lender paid to a public administrative body.

The payment is due without undue delay and no later than the end of the 30 days beginning with the day after you gave notice. If it is not paid by then, the lender can recover it as a debt.

What happens to the car

The Act says that when you withdraw from a hire purchase, conditional sale or credit-sale agreement after the credit has been provided, and you pay in full what section 66A(9)(a) requires, title to the car passes to you on the same terms as it would have without the withdrawal. Section 66A does not mention returning the car.

Withdrawing from the credit is also not the same as cancelling the purchase of the car. A right to cancel the purchase itself applies to a car bought at a distance or away from the dealer’s premises, not to one bought at the showroom, as our answer on returning a car bought online explains.

Agreements that are excluded

The right does not cover an agreement for credit exceeding £60,260 (other than a residential renovation agreement), an agreement secured on land, a restricted-use credit agreement to finance the purchase of land or a bridging loan connected with the purchase of land.

A consumer credit agreement is one between an individual and a lender (section 8), so check with your lender that yours is a regulated agreement.

After the 14 days

Once the 14 days have passed, two other rights remain on a regulated hire purchase or PCP agreement: settling early under section 94, and ending the agreement and handing the car back under section 99. Each has its own answer. The Consumer Credit Act sections used here extend to the whole of the UK, including Northern Ireland.