How to Cancel a Car Loan After the Papers Are Signed & the Bank Approved the Loan
Be certain you want to buy a car before signing any documents.
Items you will need
- Car purchase documents
Read the terms of the contract you signed. Whether you can back out of the deal depends on the laws of your state. The Federal Trade Commission recommends getting in touch with your state’s consumer protection agency or attorney general’s office if you have questions about your rights regarding vehicle financing under state law. Many states have no cooling-off period in which you can get out of the contract if you change your mind.
Contact the dealership where you bought the car. If the dealer offers a grace period that gives you the option of canceling the contract within a certain number of days, find the specific provisions in your contract. The terms of the contract should also include the circumstances under which you can cancel the purchase.
Explain to the dealer and financial institution giving you the loan why you have decided not to buy the vehicle. They may allow you to cancel the loan and get out of the deal as long as you agree to return the vehicle to the dealership immediately.
Put your request in writing. State in the letter why you wish to terminate the purchase contract. Give both
the dealership and the lender a copy. Unless specified in the terms of your loan agreement, the dealer and finance company don’t have to let you cancel the contract. Be persuasive but honest when making your case.
Pay any interest payments, penalties or mileage due at early termination. Even if the dealership and lender agree to let you out of your contract, they probably will require that you at least pay some interest. Generally, you must pay the interest that has accrued on the loan since the day that you signed the loan documents.
Use the three-day period you are allowed to back out of the loan if you applied for a home equity line of credit to give you the money to buy a car. As long as you haven’t received the money yet, you have three business days to rescind a mortgage refinance or home equity loan. The home you use as collateral to get the loan must be your primary residence.
Consult with an attorney. Although auto dealerships are not required by law to give you a period of time to cancel the purchase, you may be able to get out of the contract. You may have grounds for canceling the purchase if you can show that the dealer misinformed you about the vehicle or financing, or otherwise did not carry out the terms you agreed to in the contract.Source: autoresource.internetautoguide.com