Consumer Credit Act And Your Consumer Rights

The Right to Cancel

The Consumer Credit Act does allow a cooling off period, but only for agreements which were discussed face to face, and then signed away from the lender’s normal business premises – i.e. at the consumer’s home, place of work or at an exhibition stand. The cooling off period for agreements made in this way is 5 days after receipt of a second postal copy of the agreement (which contains a cancellation form) from the lender. Cancellation must be in writing and sent by post within the 5 days. Any sums of money already paid will be returned , and the consumer will be released from any associated finance agreements.

if contracts have been signed in the shop or the trader’s office they are legally binding as soon as they have been signed. If the contracts have been made and signed at a distance (by post, internet or over the phone), then the Distance Marketing Regulations apply and provide you with 14 days to change your mind. See our section on Cooling Off and Cancellations to get the whole picture.

Terminating the agreement

Under the Act, there is only provision for legally terminating an agreement if it is an HP, conditional sale or hire (see our Guide to Consumer Credit Agreements for definitions). 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).

The right to complete payments early

The Consumer Credit Act gives you statutory right to repay the debt early and complete the payments ahead of time, as long as you have provided written notice of intention to the lender. A statutory rebate for the charge for credit will then be returned to you which must be calculated according to regulations set out in the Act – not of the lender’s choosing!

Default on payments

The Act requires certain procedures be followed and specific documentation be provided in the event that two or more payments are missed. Within 14 days of the second default payment, the lender must send you a notice of default to include the following:

  • Exact details of the breach – i.e. how much is owed
  • How this can be remedied – i.e. what action the consumer must take and by when
  • Whether any additional sums of money (default sums) have been incurred as a result and when they must be paid
  • Consequences of further default or inaction
  • Restrictions (if any) on the lender’s right to repossession

The notice of default will not be enforceable if the procedure is not followed in this way by the lender. Furthermore, the goods cannot be repossessed without first serving this notice and waiting for the required 14 days to enable you to respond.

Applying for a Time Order

A further consumer protection measure the Act incorporates is the ability of the consumer to apply for a ‘time order’ from the courts. If successful, this will provide you with a longer amount of time to pay, in the context of your personal situation. To avoid further action from the lender in the meantime, you must write to them advising them of this intention.

Back to Credit Cards and Credit Agreements: Consumer Credit Act 1974

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3 comments… add one
  • John Simpson 28 July, 1:04 am

    I purchased a vehicle on 6/11/13 from a used car dealer as is condition. I asked if the vehicle had any known problems that would need to be addressed right away and was told No except for the windshield which had a crack across the bottom of it. The driver side door and fender was also dented in and that’s why I was told I was going to get it for the price they had it up for. I went about 2 weeks later to get an full oil change done and they told me I had multiple leaks in the oil and transmission parts. They went and filled all the fluids up anyway including the coolant. Now on July 24th my low coolant light comes on and when I went to pure in the fluids the reservoir looked like it had caked up liquid in it like it hasn’t been touched in months or more and the coolant just poured right out and it overheats within 10 minutes of driving it. This had to be known by the dealer since it didn’t leak when I left the lot or for the first 2 weeks or so. I noticed it leaking after I was notified at the oil place but it looked like water so I thought it was from the air condition being ran. Obviously it wasn’t they must of rigged it at the car dealer place and never told me. I also got a car fax that had nothing on it about that. Do I have any recourse whatsoever, even though I bought as is.

  • Ms V.Wilkinson 17 November, 4:40 pm

    I bought a second hand car on a hp agreement on finance through a broker. After a week ther were quite a few problems which the garage put right but then ther was a serious problem so they agreed to replace that car with a different one. I got that car on in September but again it had numerous faults in four months I only drove this second car for 1week the rest of the time it was in the garage getting repaired. To name a few points they replaced the clutch, the gearbox, the drive shaft then the full engine aftervtht it went back 3times for the engine mounts. I rang the finance said I had had enough I had no faith in this car and I wanted to reject the car and the agreement. I put this in writing they didnt reply but have rang a few times saying I cannot reject it tge garage are willing to put it right o I have to accept it??? I told her I have given them well over the accepted amountbof time to put it right but again its in the garage?? She has just rang again saying the car is ready and waiting to be picked up by myself again I said have u received my letter? She sed yes so I said well will u kindly reply to it in writing she said but the car is fixed you need to ho and get it. She will not accept anything I say plus she says the broker is with her on this and I have to go get the car. Were exactly do I stand in this am I right to reject it or are they right please???

  • samuel mawhinney 4 April, 4:47 pm

    what advice can be given to one on these basis : the person has a small loan via card – the application was accepted on line– filled in on line signed on line– , the person got into arrears because of ill health, osteoarthritis , diabetic ,suffers from chronic pain 24/7, has just come out of hospital after having a heart attack–, the situation for the arrears has been explained two fold, the company received a letter from his GP explaining their condition and that the constant barraging would not help his health any.
    What can be said without fear of refute that the person has contact the company on several occasions about payments offer of payments they have not responded, if an e-mail was sent ( several over time ) he would get a reply back stating that they needed his DOB and address , even though he wrote again (on several occasions)
    giving all details ALL! BUT STILL NO REPLY. as a matter of fact his last communication was 3 /4 weeks ago but still no reply . I can inform you now that the person has since been back in hospital with the same ailment .

    This whole situation i feel is totally out of order by the company and i feel that the company should be brought to book one way or the other for their handling of this situation and the way they are ignoring all communication sent!
    Surely this person has some legal right of some sort ( not receiving a written copy of agreement) and being treated like dirt on the street ,A NOBODY!