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Credit Agreements and your right to cancel

We have been asked by many clients if they can simply cancel their agreement. A properly made credit agreement is a legally binding contract, and it may not be possible for you to get out of the contract. With certain agreements, you may have to pay a charge if it does not run for the full period, for example, to cover the administration costs and the loss to the credit provider of the interest you expected on the loan.

In order to see whether you can get out of a credit agreement, you should find out what type of credit agreement you have entered into.

You will have an agreement for credit when your request for credit has been accepted by the credit provider and both you and the credit provider have signed the written agreement. This means you can withdraw your request for credit at any time before both parties have signed the agreement. This applies whether or not the agreement is regulated under the Consumer Credit Act 1974.

In practice, many requests for credit may now be agreed and signed very quickly and there may therefore be little time for you to withdraw your request. However, if the credit provider does not sign the agreement because s/he wants to run credit checks on you, you can withdraw even if you have already signed your part of the credit agreement, although it may be difficult to find out whether the credit provider has signed or not.

Withdrawing from the credit agreement may cancel your contract with the trader for the goods or services where there is an agreement which finances the purchase of goods and services. However, if an agreement for credit is separate from an agreement for goods or services (for example, if you applied for a loan from your bank), the contract for goods or services is not cancelled by withdrawing from the credit agreement.

If the agreement has already been signed by the credit provider, the contract is not made until you sign. You can of course decide not to sign.

If the agreement has been signed by both parties, the next stage is to look to see if the agreement was not made properly, it may be unenforceable (or enforceable only by order of the court) in the following circumstances:

If all the above conditions have been met, you may still have a statutory right to cancel if:

If you are unsure if you have a right to cancel, our advisers will be happy to discuss your case and advise you further. We can assist you with any type of credit agreement i.e. hire purchase, personal loans, credit cards, mobile phone bills etc.

We do not charge for challenging credit agreements. Our debt management programme works on one set fee, regardless of the number of debts we may get written off. If you are seeking free debt advice, call our advisors today. It costs nothing to discuss your options!