Withdrawing from or cancelling a credit agreement

If you have signed a credit agreement and changed your mind, the first thing to work out is which right you are using. They are not the same thing, they do not last the same length of time, and they start on different days.

The main right is the right to withdraw from a regulated consumer credit agreement. You have 14 days from the day after the relevant day, and you do not have to give any reason¹. The second is the older right to cancel, which applies to certain agreements signed away from the lender's premises, such as at a temporary marketing display stand. There you have five clear days, not counting the date of receipt, in which to cancel².

Both routes end the agreement, but they leave you in a different position on what you owe and what happens to anything you bought with the credit. Getting the notice in on time matters more than getting it right in every other respect, because the clock is judged from when you send it, not when the lender opens it³.

Withdrawing and cancelling: two different rights

The right to withdraw comes from section 66A of the Consumer Credit Act 1974. The debtor under a regulated consumer credit agreement, other than an excluded agreement, may withdraw from the agreement without giving any reason⁸. The Consumer Credit Directive behind the UK rules put it plainly: the consumer has a period of 14 calendar days in which to withdraw from the credit agreement without giving any reason⁹.

The right to cancel is a separate, older protection. It grew out of agreements signed away from business premises, where a consumer might have agreed to something on the spot without the chance to compare. The Consumer Credit Act 1974 is up to date with all changes known to be in force on or before 28 September 2026, though there are changes that may be brought into force at a future date¹⁰. In May 2026 the government announced it would repeal much of the law governing consumer credit, describing the existing framework as prescriptive, confusing and duplicative, in requiring credit providers to communicate with customers in technical language which they may not understand¹¹. That reform has not changed the rights described here.

The practical difference is what each one does to the rest of the deal. Exercising a right to cancel means the consumer withdraws from the contract and the contract is terminated¹². The same wording appears in the banking conduct rules: by exercising a right to cancel, a banking customer withdraws from the contract and the contract is terminated¹³. Where the same transaction attracts more than one right to cancel, the firm should apply the longest cancellation period applicable¹⁴.

The 14-day right to withdraw from a credit agreement

The core rule is short. The consumer has the right to withdraw from a credit agreement within 14 days, without giving any reason, and must repay the amount borrowed and the interest accrued between drawing down the credit and repaying it¹⁵. The Consumer Credit Act sets the period as 14 days from the day after the relevant day, with notice given orally or in writing to the creditor before the end of that period¹.

This covers regulated consumer credit agreements generally, which in practice means most personal loans, credit cards, store cards, catalogue credit and similar deals. It does not cover everything. Agreements where you have borrowed more than £25,000 for business purposes may not be regulated at all¹⁶. The Act may also not cover all credit union or buy now pay later debts, does not apply to companies providing gas, electricity, water or phone services, and does not cover councils¹⁷.

There is a second layer for distance contracts, meaning agreements made by phone, post or online. A consumer has a right to cancel a distance contract without penalty and without giving any reason within 14 calendar days¹. The cancellation period begins either from the day the distance contract is made, or from the day on which the consumer receives the contractual terms and conditions and pre-contractual information, if that is later¹.

When the 14 days start: signing, receiving your copy or your credit limit

The start date is where most disputes begin, because it is not always the day you signed.

For a credit agreement generally, the 14-day cooling-off period starts from the day the agreement is concluded, or if later, from when you receive a copy of the agreement⁵. The Consumer Credit Directive says the same: the period runs either from the day of the conclusion of the credit agreement, or from the day on which the consumer receives the contractual terms and conditions and information, if that day is later⁹.

Credit cards have their own trigger. For a credit card the 14-day cooling-off period starts from when you receive notification of your credit limit⁵. That matters because a card agreement is often signed before the limit is set, and the limit is what tells you the size of the commitment you have taken on.

Distance contracts follow the same shape: the cancellation period begins from the day the distance contract is made, or from the day the consumer receives the contractual terms and conditions and pre-contractual information if later¹. Where a contract is an initial service agreement followed by successive operations, such as a bank account with ongoing deposits and withdrawals, the right to cancel applies only to the initial agreement¹⁴.

Agreements signed away from the lender's premises: five clear days to cancel

Where an agreement is signed off trade premises, for example at a temporary marketing display stand, a different and shorter clock applies. You then have five clear days, not counting the date of receipt, in which to cancel².

The paperwork has to support that right. 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 days⁵. If the lender does not comply, the position changes: there is a right to cancel under the conduct rules where the lender has not complied with the requirement to communicate terms and conditions¹.

The effect of cancelling in this window is stronger than a simple termination. The agreement and any linked transactions are treated as if they had never been entered into; the loan company must repay all sums which you have paid, and you must return any goods you have received². The agreement does continue in force so far as it relates to repayment of credit and payment of interest, so the money still has to go back¹⁸.

How to withdraw or cancel: giving notice

Notice does not have to be elaborate. The debtor must give oral or written notice of the withdrawal to the creditor¹. For peer-to-peer agreements the rules set out the accepted methods in more detail: oral or written notice to the firm, with written notice by electronic means sent to the number or electronic address specified in the agreement, or by post to, or left at, the postal address specified in the agreement¹⁹.

The safest approach is writing, and keeping a record of when you sent it. The point for determining whether notice of withdrawal is within the 14 days is the despatch of the notice by the consumer, rather than receipt by the lender³. For peer-to-peer agreements, written notice by electronic means is regarded as received at the time it is sent, and by post at the time of posting¹⁹.

Before you sign, the lender should have told you how to do this. The rules require disclosure in good time before, or if that is not possible immediately after, the consumer is bound by a contract that attracts a right to cancel or withdraw, and in a durable medium: the existence of the right, its duration, the conditions for exercising it, the amount the consumer may be required to pay, the consequences of not exercising it, and practical instructions including the address to which notification should be sent¹⁴. Key features documents must explain the same things²⁰.

Citizens Advice puts the practical step simply: contact the lender to tell them you want to cancel, which is called giving notice, and it is best to do this in writing, though your credit agreement will tell you who to contact and how²¹. Template letters exist for cancelling a credit agreement before it starts, and they cite the Consumer Credit Act 1974 as amended²².

Repaying within 30 days: what you owe and the interest

Withdrawing does not wipe the debt. You have to repay the amount borrowed along with any interest that has accrued up to the point at which you cancel². The Consumer Credit (Agreements) Regulations 2010 set the deadline: the requirement to pay, without delay and no later than 30 calendar days after giving notice of withdrawal, the interest accrued after withdrawal²³.

The Consumer Credit Act gives the same window for the credit itself: it must be paid without undue delay and no later than the end of the period of 30 days beginning with the day after the day on which the notice of withdrawal was given, and it is recoverable as a debt if unpaid¹. The schedule to the regulations repeats the requirement to repay the credit without delay and no later than 30 calendar days after giving notice of withdrawal⁴.

The firm has obligations in the other direction. It must, without any undue delay and no later than within 30 calendar days, return to the consumer any sums it has received under the contract, except amounts the consumer may be required to pay¹². Citizens Advice states the same deadline from the borrower's side: if you have received money already then you must pay it back, and the lender must give you 30 days to do this²¹.

There is a separate protection if the lender raises your interest rate. The rejection period is 60 days, during which the hike can be rejected, the card cancelled and what is owed paid back at the old rate²⁴.

Where the right to withdraw or cancel does not apply

The withdrawal right has a list of exclusions. It does not apply to agreements secured on land, restricted-use credit agreements to finance the purchase of land, bridging loans for land purchase, credit exceeding £60,260 other than a residential renovation agreement, or cancellable agreements⁴.

The cancellation rules have their own carve-outs. There is no right to cancel under the conduct rules for agreements to which section 66A of the Consumer Credit Act applies, agreements secured by a legal mortgage on land, agreements cancelled under specified regulations, and restricted-use credit agreements to finance the purchase of land or bridging loans for land¹. There is also no right to cancel for a regulated deferred payment credit agreement to which section 66A applies¹.

Savings and investment products sit outside the main right. There is no right to cancel a non-distance contract to open or transfer an ISA (mini or maxi, but not a cash deposit ISA or an ISA containing a life policy), to open or transfer a child trust fund, or for an enterprise investment scheme. For an EIS or ISA which is not a lifetime ISA, the right to cancel is replaced with a seven calendar day, pre-contract right to withdraw the consumer's offer, and for a lifetime ISA with a fourteen calendar day pre-contract right to withdraw²⁵.

Banking contracts have their own limits. There is no right to cancel a contract, other than a cash deposit ISA, where the rate or rates of interest payable on the deposit are fixed for a period of time following conclusion of the contract, and no right to cancel for a cash deposit child trust fund other than a distance contract²⁶. A connected contract which is not a distance contract is also outside the right to cancel²⁷.

After the cooling-off period: ending hire purchase early or settling the debt

Once the 14 days have passed, the withdrawal right is gone, but other routes remain.

For hire purchase and conditional sale, section 99 of the Consumer Credit Act 1974 gives a right to terminate and end the agreement at any time before the last instalment is due⁷. On voluntary termination the liability is limited to half of the total amount payable under the agreement, minus sums that have been paid and sums that are due⁷. The 50% does not have to have been paid for the agreement to be terminated, although some creditors state that it does⁷.

If the creditor terminates instead and repossesses the goods, the calculation works differently: you will usually have to pay the full amount owed on the original hire purchase agreement minus what you have paid and minus the amount the creditor gets back from selling the goods, with the option to purchase fee also deducted⁷. Where a homeowner's liability arises under hire purchase or conditional sale, it is limited to paying 50% of the total price, plus any arrears or reasonable costs if they had failed to take care of the product²⁸.

Open-ended agreements such as credit cards, store cards and payday loans can be ended at any time. Consumers can terminate at any time with a maximum of one month's notice, while creditors must give at least two months' notice¹⁵. The same rule appears in the disclosure regulations: the consumer cannot be required to give more than one month's notice and the creditor must give at least two months' notice³.

If you are struggling rather than simply changing your mind, the rules on arrears give you time. You will normally have a minimum of 14 days to fix things after a default notice¹⁶. Free, impartial help is available from Citizens Advice and from MoneyHelper, and the Financial Ombudsman Service can look at credit complaints if a firm will not resolve them.

Cancelling a payment is not cancelling the agreement

A recurring card payment, sometimes called a continuous payment authority, is a common source of confusion. You can cancel a recurring card payment by contacting the business taking the payment and asking them to stop, or by asking your card issuer to cancel the payment²⁹. You do have the right to cancel directly with your card issuer, and once you have done this it must stop payments immediately³⁰.

But cancelling the payment does not necessarily end your contract with a business. It will still be your responsibility to pay any money that you owe under a contract²⁹. If a payment is taken after consent is withdrawn, your bank should give you a refund and this will include any interest or charges added to your account as the payment was unauthorised³¹.

Direct Debits work differently again. A Direct Debit can be cancelled at any time by contacting the bank or building society, though written confirmation may be required, and the payee company is also notified³². To withdraw consent for a card payment, the card issuer, the bank, building society or credit card company, is told that the payment is not to be made, by phone, email or letter³³.

Getting a credit broker's fee back

If you paid a broker to find you a loan and no loan came through, there is a specific rule. Under section 155 of the Consumer Credit Act 1974, customers are entitled to a refund of all but £5 of a credit broking fee if they have not taken out a loan found by the broker within six months⁶. The credit broker is allowed to keep £5 of any fee if the customer has not taken out a loan⁶.

The Financial Ombudsman Service says there are rules about how much a credit broker can charge if a customer does not take out the loan, so even if you have already paid, the position is not necessarily final³⁴. Complaints the ombudsman sees include being charged a fee for finding a loan, sometimes without getting a loan, fees not refunded when no loan was taken out or offered, and being misled or not correctly informed about the loan's terms or cost⁶.

What protects you, and where it stops

The withdrawal and cancellation rights themselves are the first protection, and they are backed by the conduct rules. Firms may provide longer or additional cancellation rights voluntarily, but if they do, these should be on terms at least as favourable to the consumer as those in the rules, unless the differences are clearly explained¹⁴.

Beyond the cooling-off period, section 75 of the Consumer Credit Act 1974 makes the finance or card provider as responsible as the trader for a breach of contract or misrepresentation³⁵. That applies to credit card purchases where the cost was more than £100 and less than £30,000³⁶. If the cost exceeds £30,000 and is less than £60,260, and the finance was arranged specifically to buy the goods, service or digital content, a similar protection applies³⁵. You cannot recover your losses from both the credit card company and the retailer³⁷.

Where the protection stops matters as much. Section 75 does not cover charge cards or debit cards³⁶. The Act may not cover all credit union or buy now pay later debts¹⁷. And the withdrawal right does not apply at all to the excluded agreements listed above, including credit over £60,260 and agreements secured on land⁴.

If a firm will not accept your withdrawal, complain to it first, then take the complaint to the Financial Ombudsman Service, which handles credit broking and credit complaints³⁴. Citizens Advice and MoneyHelper both offer free, impartial guidance, and a template letter can put your notice in a form the lender has to answer²².