Cancelling a Credit Agreement
When you agree to borrow money or pay for goods or services in instalments, you’re entering into what’s known as a credit agreement. If the agreement falls under the Consumer Credit Act 1974, you have the right to cancel it within 14 days — this is commonly referred to as a cooling-off period.
If more than 14 days have passed since you signed, you might want to explore options for settling the credit early.
If you’re having difficulty making repayments or managing other debts, consider getting support from Citizens Advice.
Is Your Credit Agreement Covered?
To check whether your agreement falls under the Consumer Credit Act, review the document — this information is typically shown at the top of the first page.
The following agreements are generally covered:
- Personal loans
- Credit cards
- Payday loans
- Hire purchase agreements
- Catalogue credit
- Store cards
- Store finance or ‘buy now, pay later’ deals
It doesn’t matter how the agreement was arranged — in person, online, by phone, mail order, or even digital TV.
If you’re unsure or think your contract might not be covered, it’s a good idea to speak with an adviser at Citizens Advice.
How to Cancel
You have up to 14 days from the date of signing the credit agreement to cancel it.
You’ll need to inform the lender that you’re cancelling — this process is known as giving notice. It’s usually best to do this in writing, but your credit agreement will explain the proper method and contact details.
- If you’ve already received funds, you’ll need to repay the amount borrowed — the lender must give you at least 30 days to do so.
- If you haven’t signed the agreement yet, you don’t owe anything.
You can also cancel a hire purchase agreement and return the item. If you wish to keep the item, you’ll have to find another way to pay. If you’ve paid a deposit or partial payment for goods or services that haven’t yet been delivered, you should receive a full refund when you cancel.