Ending a Credit Agreement

It should be once again pointed out that only certain types of credit agreements, made under certain circumstances have a statutory cooling off period. If you have signed an agreement in on trade premises, in the presence of the lender (or a party to the agreement), the contract is legally binding from the moment it is signed.

Ending a credit agreement

The Consumer Credit Act (CCA) gives the consumer the right to settle a fixed-sum credit (loan) agreement early, by giving notice to the lender and paying the outstanding sum in full. New regulations prescribe exactly how the outstanding sum should be calculated, so there should be no concerns of being ripped off by the lender. Furthermore, consumers have the right to claim a rebate of the charges for credit (less taxes, duties, fees or charges payable). The amount of the rebate is defined in the Act as:

…the difference between the total amount of the repayments of credit that would fall due for payment after the settlement date if early settlement did not take place

The settlement date for the purposes of calculating the rebate will generally be 28 days after the consumer notifies the lender of their intention to settle the agreement early, although this can be deferred.

Similar to s 77-79 of the Consumer Credit Act, s 97 allows the consumer to request a statement containing information pertaining to early repayment. Failure to do so within 12 working days renders to debt unenforceable until the statement is provided.

Terminating an agreement

In the case of HP or conditional sale, the agreement can be terminated at any time before payment of the last instalment, provided at least one half of the total price has been paid and reasonable care of the goods has been taken. For hire agreements the agreement can only be terminated after 18 months (unless an earlier date is mentioned on the contract).

Leave a Comment

14 comments… add one
  • James 9 March, 7:24 am

    If a car finance company offers “£1000 minimum part exchange” on your old vehicle no matter age or condition. And you receive less. Is this misleading or false representation?

  • Catriona 9 March, 3:20 pm

  • gavin 23 March, 7:50 pm

    hi i need help i bought a car on finance and found out later on that my car has problems ive taken it back to where i bought and there trying hide the fact that there is a problem which i no there is because it affects my driving and i have 1 months warranty left i believe there trying to make excuses so my warranty runs out and im left with a car that has problems im sick of going back because they just dont seem to be helping me ive been back 6 times now what shall or can i do to solve this

  • jodie 16 September, 12:12 am

    hiya, i signed a contract with dfs for a sofa and a chair,i no longer want it because its not going to fit in the house,its too big.so i want to no if i can cancel it,but they said i cant, what are my rights.
    when i spoke to the women from dfs on the phone she said the person who delt with you should of told you,you have two days to cancel.but i said the women who delt with me said no such thing.i told her il have to see a sclistor,she said you dont need to go that far.why not?

  • Tony 18 February, 11:49 pm

    Hi. Can someone help?

    I understand that you can walk away from a HP or a Conditional Sale agreement once you have paid off a certain amount of the balance.

    I have a conditional sale agreement for a holiday lodge which is £100k over 15yrs and I am now 7 years into the agreement.

    Can I simply hand back the keys and walk away without penalty or disruption to my credit history?


  • chris 9 October, 2:14 pm

    hi, can someone help.
    my hire purchase agreement is coming to an end. i have two months left of payments on my car. ive told them to come collect the car but im waiting for my v5 form because ive took my private reg off. they have told me i may need to pay another payment if the v5 form is not back in time.
    can i just cancel the direct debit, so they then need to just collect the car


  • Christy 24 December, 5:25 pm

    I am wanting to go travelling but have a HP agreement for 5 years, I am close to paying off 50% of the full amount owed and am wondering about voluntarily termination because I cant see any information about it in my agreement.


  • carly 9 February, 2:47 pm

    my grandaughter has taken out finance for a second hand car, she has not made a payment yet, she has been told she is suffering from serious mental health problems so is not able to work now so will not be able to make the payments what can she do.

  • Pawel 6 June, 4:16 pm

    I’ve got a hire agreement for payment terminal with First Data. Can I terminate it after 18 months without paying a restocking fee (L190)? I’m a sole trader.

  • Billy 16 November, 5:09 pm

    I was looking for a loan but never took it out yet they took 69 pounds from my bank account when I got in touch they said they will give me 30 back can they really do this can anyone help me thanks

  • Elio 17 March, 9:27 pm

    I subscribed to the UK business funding organization last month with two payments agreed over 28 days and when I checked my credit card statements it showed that two payments were taken from my account and a further one 28 days later, I e-mailed the UK funding and they said my credit card would be refunded within 3-6 working days, I contacted my credit card provider and they said that what they done is illegal,I now want a full refund and all my personal and financial details deleted from there organization as I don’t trust them,I have also paid a £12 charge and interest since the first payments were taken from my credit card,what can I do about it please?

  • Bev owen 11 April, 12:11 am

    Hi is it law insurance people must give written notice of cancellation of the policy

  • Robert Wilson 29 March, 3:18 pm

    If I end a credit agreement early by paying off the outstanding balance will it affect my credit score rating.

  • rob 20 December, 3:20 pm


    I have a hire agreement with Clarkwood Enterprises who provide a salary sacrifice service for various technological products. Their website states “latest technology
    ” and I purchased a MacBook Pro through during the purchase window through an online shopping service. At no time was the year of the product described. When unboxed I discovered the product was mid 2012 and raised this with CE.

    After several cordial emails requesting an exchange for the “latest” version they have cancelled my agreement and are requesting the product returned or made available for pickup. I simply wanted an exchange.

    Can they do this? Do I have any legal rights in this situation?

    I advised CE I would be forwarding all correspondence to Advertising Standards and Trading Standards regardless of whether I have a legal case.

    Thank you for your time!