When entering into a credit agreement whether a credit hire agreement, regulated agreement in which credit is issued for the purchase of goods and services to include credit and store cards is governed under the Consumer Credit Act. According to the Consumer credit act a person can cancel a regulated credit agreement under specific terms. This can be a very valuable tool to have especially if you feel you’re involved with an unfair credit agreement. Here are a few things to consider when cancelling a credit agreement without penalty:

• Time of cancellation - Certain credit agreement may be cancelled based upon the time and negotiation factor when the agreement was signed. For example if you signed the agreement at home and not in the office. You must however provide a written notice of cancellation and it must be within 5 business days after your receipt of a copy of your signed agreement. If your cancelling a purchase where the good where bought from a distances you have 7 days after receipt of merchandise to cancel.
• Cancel before making a payment - Even if you signed a credit agreement and you want to cancel it you can within a certain period of time, with the exceptions to phone purchases where there’s not written contract. So long as the contract was signed in your home and prior to the first payment installation you can cancel the credit agreement.
• Know the cooling off period - Cooling off periods typically begin the same day the agreement is signed. Generally you have about 14 days if you purchase goods from a catalogue while others will allow five days from the receipt of your notice to the right to cancel.
• Cancelling after payments have been made - Generally, when purchasing goods that can be returned is the only way to cancel an agreement after payments have been made. Basically, you’re required to return the merchandise, however there’s a good chance you will still be responsible for paying any outstanding balances and the money paid prior to will apply to the balance.

Generally reviewing the cancellation notice provided by the lender is the key to determining when you can cancel a credit agreement. Basically the notice will outline how and when you have to cancel. Normally, you’re required to cancel in writing and where a deposit is furnished when cancelling according to your cancellation agreement you may be entitled to a deposit refund. Most people entitled to cancel a credit agreement must provide written notice within the 5-7 days of the cooling off period as notated on the cancellations notice rights.

The only time a credit agreement cannot be cancelled if the following situations apply:

1. You have bank overdraft
2. Secured loans on property like a mortgage
3. Loans under 50 pounds unless it’s credit hire agreement / purchase
4. Loans less than 35 pounds. Unless the agreement was made from a trade.
5. Burial loans following a death.