Changing Your Mind

If you sign the agreement for a regulated loan at the lender's offices or in the shop where you're buying goods or services, you can't change your mind and subsequently back out of the deal.

But if you sign elsewhere - say, you take the agreement home to study, or it's posted to you, or an agent brings it to your home - you have a 'cooling-off period in which you do have a chance to change your mind. When you're sent the second copy of the agreement it must be accompanied by a separate note telling you about your right to cancel. You have five days, starting with the day after you received the note, within which to give your written notice that you wish to cancel the deal. You're deemed to have given the notice as soon as you've put it in the post (regardless of how long it takes to reach the lender) but you'd be wise to have some proof of posting - use registered post or get someone to witness you putting it in the box.

The cooling-off period is a particularly welcome safeguard where you have entered perhaps rather hastily into a loan agreement made, say, over the phone, or through a door-to-door salesperson who was selling double glazing, fitted kitchens or the like.

WARNING The cooling-off period doesn't apply to secured loans. This is a quirk of the law - secured loans must be notified to the Land Registry, which can't cope with subsequent cancellations of the arrangement. Instead, the Consumer Credit Act requires that you must be given at least seven days to study a copy of the agreement for a secured regulated loan and think about the deal before you can sign it - if you're not given this pause the agreement can't be enforced. Neither the lender nor anyone else involved in arranging the deal should contact you during that seven days. The copy must contain a note headed 'Your right to withdraw' telling you what to do if you don't want to proceed with the deal, though in practice you need do nothing at all simply don't sign anything.

Learn more about Your Rights And Responsibilities - Here

Read The Small Print

Before you finally lay hands on your loan, you'll be asked to sign a credit agreement which sets out the terms and conditions. The agreement is a legal contract, so read it carefully before you sign. This may be hard work - the Consumer Credit Act requires that the information be `readily legible', but it doesn't require that it be readily intelligible. If you are unsure about any of the terms or conditions, ask the lender to explain what they mean. If you're still unhappy, get advice from your local Citizens Advice Bureau (address in the phone book).

The agreement is effective only when both... see: Read The Small Print

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