Is there a cooling off period on car finance?
Written by
Joe Towner
Reviewed by
Amy LancashireYes, car finance agreements such as hire purchase (HP) and Personal Contract Purchase (PCP) come with a 14-day cooling off period. You can withdraw from the agreement without giving a reason under section 66A of the Consumer Credit Act 1974. But it’s a right to cancel the finance, not the car purchase. When you took out the finance, the finance company paid the dealer for the car. If you withdraw, you pay that money back yourself, plus interest for the days you had it, within 30 days, and the car becomes yours. So withdrawing means swapping the finance for another way of paying. It doesn’t let you necessarily just hand the car back and walk away.
When does the 14-day cooling off period start?
The 14 days start the day after your agreement is made, or the day after you receive your copy of the signed agreement, whichever is later. So if your copy arrives a few days after you sign, your 14 days start the day after it arrives.
The right doesn't apply if you're borrowing more than £60,260.
What happens if I withdraw from car finance?
You repay the money you borrowed within 30 days of telling your finance company, plus interest for each day you had it. Your agreement should show the daily interest amount.
You can't be charged any fees for withdrawing.
The car becomes yours once you've repaid in full.
Your deposit isn't refunded. You're keeping the car, so the deposit stays part of what you've paid for it.
Linked extras end too. If your finance company, or a company it has an arrangement with, provides a service linked to the credit, such as payment protection insurance, that contract is cancelled as well.
In practice, withdrawing only works if you can pay for the car another way, for example with savings or a cheaper loan.
Can I hand the car back during the cooling off period?
Usually not. The 14-day right covers the finance, so changing your mind about the car itself isn't enough. But you may be able to return it if:
You bought it online or by phone. If you agreed to buy the car without meeting the dealer face to face, you usually have 14 days from delivery to cancel the purchase under the Consumer Contracts Regulations 2013. Cancelling the purchase should also end any finance arranged through the dealer.
The car's faulty. Under the Consumer Rights Act 2015, you have 30 days to reject a car that's faulty, not as described or not fit for purpose. On HP or PCP, you make this claim to your finance company, because it's the one that supplied the car.
How do I cancel car finance within 14 days?
Check your agreement for how to give notice, such as by phone, email or post.
Tell your finance company you're withdrawing, within the 14 days. If you call, follow up in writing so you have a dated record.
Ask for the exact amount to repay, including daily interest.
Pay it within 30 days of giving notice.
If you don’t cancel within 14 days, you can't withdraw any more, but you can still end the agreement. You can settle it early by paying a settlement figure, hand the car back through voluntary termination, or part exchange the car and let the dealer clear the finance.
Car Finance Cooling Off Period FAQs
Does cancelling car finance affect my credit score?
Withdrawing shouldn't count against you. Your finance company may show the agreement on your credit file as repaid, or remove it altogether. But the hard credit check from your application stays on your file either way. Find out more about soft and hard credit checks.
Is there a cooling off period on car leasing?
Not under the same rule. A personal lease is a hire agreement rather than a credit agreement, so section 66A doesn't apply. Check your lease agreement for any cancellation rights it gives you.
Does the cooling off period apply to personal loans?
Yes. Most personal loans come with the same 14-day right to withdraw under section 66A, and it works the same way: you repay the money you borrowed, plus interest for the days you had it, within 30 days. If you used a personal loan to buy a car, the car’s already yours, so withdrawing from the loan doesn’t undo the purchase. You’d still need to find the money to repay the loan another way. The right doesn’t apply to loans secured on your home or loans of more than £60,260.
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
