Cancelling a car loan can be relatively straightforward if you do it within a few days of signing the contract. Depending on where you signed the car loan agreement, you have up to 30 days within which you can cancel. If you have received the money from your lender within this time, you will have to pay this back, usually within 30 days. Generally, if you signed the agreement on your lender's premises you cannot cancel, unless they have not yet signed their part of the contract. In this case, you have a very short period of time within which you may cancel the agreement. You should call your lender immediately, following up your cancellation notice with a letter ideally posted by recorded delivery.
If you signed the agreement at home, for example, if you took the contract home to read it through and subsequently send back, you have a legal right to cancel the agreement within a certain cooling-off period. This period is usually fourteen days. However, once you have signed the agreement and returned it, you only have five days after you receive the reply in which to cancel. This reply should include a copy of your cancellation rights. The loan contract is unenforceable if you are not given notice of these rights.
Once the two week cooling-off period has elapsed, you will usually have to pay an early repayment fee if you wish to cancel the agreement; this fee is often the equivalent of one or two months' interest. Check the terms and conditions of your loan agreement however, as this fee varies between lenders. You must repay the loan amount in full, and usually within a short period of time after you cancel: typically within thirty days.
