Cancelling Car Finance Within 14 Days

If you have recently taken out car finance and are unsure about it, you have the right to a 14-day cooling-off period.

Driving a brand-new car off the dealership's forecourt for the first time is one of the most exciting things you can do as a motorist. The new car smell hits differently when it's your own.

Most people buying a new car do so using a car finance plan. 90% of new vehicles are sold with finance, giving the driver peace of mind that they don't have to use all of their savings to pay for it in one go.

There are many benefits of car finance, but undoubtedly the main ones are spreading the monthly payments, knowing the payments are fixed each month, and the ability to drive a car on a tight budget.

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However, not everything can be plain sailing, and sometimes things go wrong that are out of your control. Therefore, it's important to know your rights when buying a new car and taking out car finance.

That's why we've put together this guide to help you understand what you can and can't do when you have a car on finance, and the next steps you should take if you want to cancel your finance.

Can you cancel your car finance within 14 days?

Once you enter into a car finance agreement, for the first 14 days, you will be in something known as a 'cooling-off period'. You may have heard the term before, and it is essentially one of your rights as a consumer.

If, for whatever reason, you are unhappy with your car finance deal or you have completely changed your mind, provided you are in the cooling period, you will legally be allowed to cancel the agreement.

What are my rights to cancel my car finance?

Customers that enter into a car finance agreement are entitled to the 'Right to Withdrawal', also more commonly known as a 'cooling-off period'. This allows those people to legally cancel their finance.

From the moment you receive the signed contract, you have 14 days to cancel if you wish. Within 14 days, if you do cancel, you have no legal obligation to give a reason why you chose to cancel.

How to cancel my car finance at a later date?

If you get through the initial 14-day cooling-off period and later down the line you decide that you want to get out of your car finance deal, there could be an option available to you.

Not too many people are familiar with it, but there is a clause within your contract that allows you to terminate the agreement provided you have paid at least 50% of your term.


Upon doing this, you return your vehicle to the lender without having to pay a penny more. The reason one may utilise this is that they no longer want the car and fancy something new, or their financial circumstances have changed.

As long as your car is in good condition and could easily be resold, there should be no pushback from the lender to stop you from doing this. If, however, work does need to be done, you would be required to cover these costs.

If you are serious about undertaking this option and have damage to your car, you should take it to be repaired before returning it to the lender to avoid any excess fees.

If you're desperate to get out of your contract but are yet to pay over 50% of your deal, you can cover the costs yourself and round up the money. It's not an ideal scenario, though, as you will have to use savings that could be used on another vehicle.

Ensure that if you go down this route, get all of the details of the withdrawal in writing so you can refer to it at any time. It will cover you if you ever get accused of defaulting on the contract's terms.

Can I sell my car on finance?

If you have a car on finance that is not a personal loan, the vehicle does not officially belong to you, so you can't sell it privately. If you were to do that while still owing the lender, you would be breaking the law.

To sell your car, you would need to acquire your early settlement figure and pay that off before the vehicle officially belongs to you. Once you've done that, you are free to do whatever you want.

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What are my rights when buying a car from a private seller?

If you're considering buying a used car from a private seller, the chances are you will be able to buy something cheaper than a new or nearly-new car. 

However, you will likely have to buy it outright with cash rather than on a finance plan. If you are ever offered a finance plan by a private seller, bear in mind that the legislations are different than if you purchased through a dealer.

You might decide that before the 14-day cooling-off period is up that you wanted to cancel your car finance. A private seller has no obligation to allow that, so do your research and be careful whom you trade with.


Does cancelling car finance affect your credit score?

If you cancel your car finance agreement, it may show up on your credit history but is unlikely to affect your credit score. A lender would rather see that you have cancelled your car finance in a legal way than stop paying or missing payments altogether.

What are the reasons for voluntary termination?

The two main reasons why someone may want to take part in voluntary termination is they either want to get a new car or a change in personal circumstance mean they can no longer afford the finance.