Withdrawing from a credit agreement.

kindai

kindai

kindai

Sgarrista
System Admin
Joined
9 Aug 2013
Posts
10,931
Location
Bromsgrove
A mate of mine took out a loan but turns out he didnt need to.

He is within the time limit to withdraw from the agreement, but the company are saying even if he does he owes £~200 odd in a credit arrangement fee still.

It was my understanding, if you withdraw (not settle) that all fees are also waived?
 
I took out a loan with HSBC for a car earlier this year, and decided I didn't want it. Phoned them up to withdraw within the cooling off period and got it cancelled, but it took a lot of persistence as the person on the other end didn't understand that I wanted to cancel rather than repay early - early repayment would have seen me pay interest. The got it right in the end, but I had to be insistent that they weren't doing what I asked when they were telling me that I would have interest charges.
 
You have to pay any interest that has built up as it would have put the account into negative. But I don't think arrangement fees fall under the agreement as they are just additional charges on top of your loan amount.
I would call citizens advice and see what they say.
 
stopper said:
You have to pay any interest that has built up as it would have put the account into negative. But I don't think arrangement fees fall under the agreement as they are just additional charges on top of your loan amount.
I would call citizens advice and see what they say.
Click to expand...
No interest if you cancel in cooling off period.

It's NOT an early repayment - it's a cancellation.
 
Was the agreement signed on the premises of the lender or arranged as a distance sale?

If signed as a distance sale, then to cancel with no cost, this must be done so within 5 days of receipt of the paperwork stating the cancellation rights.

Outside of that , a 14 day cooling off period will apply, but the borrower will still be liable for accrued interest. (edit **Note standard terms of the CCA. Some lenders offer enhanced terms**)

If it was signed on the lenders premises, then it always used to be that the agreement was non-cancellable - I've not dealt with this sort of lending for many years now so not sure if this has changed, but I suspect it still to be the case and so interest could be charged from day 1.

**It would also help to know who the lender is, as they may have their own additional terms over and above the CCA which stipulate if they allow cancellation for a longer than required period without any interest charge.
 
Last edited:
cheesyboy said:
I took out a loan with HSBC for a car earlier this year, and decided I didn't want it. Phoned them up to withdraw within the cooling off period and got it cancelled, but it took a lot of persistence as the person on the other end didn't understand that I wanted to cancel rather than repay early - early repayment would have seen me pay interest. The got it right in the end, but I had to be insistent that they weren't doing what I asked when they were telling me that I would have interest charges.
Click to expand...

Well, you were probably liable for the interest (but not the early settlement fee) for the time you had the money. Likelyhood is they just let you off to avoid the hassle.
 
BDEE said:
Well, you were probably liable for the interest (but not the early settlement fee) for the time you had the money. Likelyhood is they just let you off to avoid the hassle.
Click to expand...
Nah, the Ts and Cs when I took it out allowed for a 14-day cooling off period with no interest. Thinking about it, that might be a HSBC specific thing, rather than a legal requirement.

Edit:

Consumer advice:
http://www.which.co.uk/consumer-rights/regulation/consumer-credit-act
Credit agreement cooling off periods
If you sign a credit agreement off trade premises - so at a temporary marketing display stand, for instance - you have the right to cancel the agreement within the cooling off period.

In such an event a notice of your cancellation rights must be included within the copy of the credit agreement and must be sent by post or email within seven days.

You then have five clear days (not counting the date of receipt) in which to cancel.

The effect of cancelling a credit agreement within the cooling off period is that the agreement and any linked transactions are treated as if they had never been entered into.

Consequently, the loan company must repay all sums which you have paid and you must return any goods you've received.
Click to expand...
 
cheesyboy said:
Nah, the Ts and Cs when I took it out allowed for a 14-day cooling off period with no interest. Thinking about it, that might be a HSBC specific thing, rather than a legal requirement.
Click to expand...

Depends where the agreement was signed on what rules apply, but many big lenders do offer terms over and above the requirement of the CCA. If it was in black and white in your terms then they shouldn't really have argued the toss.

Sliver said:
Check out a debt relief order, if you qualify then your debts are erased.
Click to expand...

That is not relevant to this thread and should be ignored in the context of the OP. Casually batting about suggesting people go for a DRO is a rather silly thing to do.
 
You must log in or register to reply here.
Back
Top Bottom