If you find you no longer require finance you have taken out on a company car, you can easily withdraw from the credit agreement within 14 days of signing, without penalty, under The Consumer Credit Act.
If you utilise credit when providing employees with company cars then you should understand your rights when it comes to returning the car, including the cooling off period when buying the car on finance.
Cooling Off Period For Car Finance
Lots of businesses offer company cars as an employee perk, but when it comes to managing the cars on the business books there are plenty of ways to ensure you don’t pay over the odds and minimise running costs.
One such option is to utilise car finance or hire purchase agreements which enable lower monthly payments to be made, providing that the cars are returned in good condition and within any mileage limits agreed at the point of sale.
If for any reason you need to cancel the car finance within the first two weeks, you are able to do this under the cooling off period without penalty assuming certain criteria are met.
Read on to find out more about The Consumer Credit Act, what this means, and how to cancel car finance within the first 14 days under the cooling off period.
What Is The Consumer Credit Act?
The Consumer Credit Act (CCA) is an important piece of consumer legislation that looks after the interests and rights of consumers by setting out how retail lending is handled by finance providers in the UK.
The legislation sets out the rules and requirements that businesses that lend money, or provide goods and services on credit, must follow. One of the biggest features of the CCA is that it gives consumers 14 days to withdraw from a credit agreement.
Credit is commonly used for hire purchase agreements of cars and vehicles. This means that the CCA applies to all forms of car finance, and is applicable whether you applied online, via the telephone, or in person as either an individual or a business.
The CCA gives you the right to withdraw from any credit agreement within 14 days of acceptance or when you receive a copy of the agreement. When it comes to car hire purchase agreements for business, this can be a valuable clause should employment plans fall through at the early stages.
A 14-day cooling off period begins when you agree to the contract and sign it or when you receive a copy of the agreement. You should however be aware that loans above £60,260 don’t include a right to withdraw. This means that if you have a finance agreement for this amount or more, you don’t have the same rights to be able to cancel the agreement within the 14 day cooling off period.
What Is A Cooling Off Period?
According to Citizen’s Advice; “When you take out a loan or get credit for goods or services, you enter into a credit agreement. Under the Consumer Credit Act 1974, you have the right to withdrawal. This means that you’re allowed to legally cancel the finance agreement within 14 days. It’s this timeframe that is often referred to as the ‘cooling off’ period.
Does Car Finance Come With a Cooling Off Period?
All providers of credit, including those that offer car finance agreements are covered by the CCA and therefore must offer the cooling off period to consumers. This means that individuals or businesses that take out credit agreements to purchase cars, can cancel them without penalty within 14 days of signing them.
Can I Just Hand Back The Car?
If you decide to cancel a credit agreement in the cooling off period, you should pay close attention to the terms and conditions of the actual sales agreement made in order to ensure that you can return the car without further penalty. Simply returning the car to the place where you purchased it does not automatically end the finance agreement.