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Cancelling a loan or credit agreement

This advice applies to Scotland

When you take out a loan or get credit for goods or services, you enter into a credit agreement. You have the right to cancel a credit agreement if it’s covered by the Consumer Credit Act 1974. You’re allowed to cancel within 14 days - this is often called a ‘cooling off’ period.

If it’s longer than 14 days since you signed the credit agreement, find out how to pay off a credit agreement early.

You can contact your nearest Citizens Advice if you’re struggling with loan payments or other debts.

Check your agreement is covered by the Consumer Credit Act

You can check your credit agreement to find out if it’s covered by the Consumer Credit Act. If it is, it should say so at the top of the first page.

The following types of agreements are usually covered by the Consumer Credit Act:

  • personal loans
  • credit cards
  • payday loans
  • hire purchase
  • catalogues
  • store cards
  • store finance and ‘buy now pay later’ agreements

It doesn’t matter if it was arranged face to face, over the phone, by mail order, or through the internet or digital TV.

You can speak to an adviser if your agreement isn't covered or you're not sure - contact your nearest Citizens Advice.

Tell the lender you want to cancel

You have 14 days to cancel once you have signed the credit agreement.

Contact the lender to tell them you want to cancel - this is called ‘giving notice’. It’s best to do this in writing but your credit agreement will tell you who to contact and how.

If you’ve received money already then you must pay it back - the lender must give you 30 days to do this. If you haven’t signed the credit agreement already then you don’t owe anything.

You can also cancel and return something you’re paying off through hire purchase. If you want to keep the goods you’ll need to pay for them another way. If you've paid a deposit or part-payment for goods or services you’ve not received yet, you should get all your money back when you cancel.

Cancelling a hire purchase agreement for a new car

When you buy a new car on a hire purchase credit agreement, the finance company pays the garage for it. You pay the money back to the finance company in instalments, with interest added.

If you want to cancel the agreement, you must pay the finance company the money that you still owe for the car within 30 days.

Returning the vehicle to the garage does not end the agreement, unless both the garage and the finance company have agreed to it.

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