You have just subscribed to a car credit agreement, but the vagaries of life have made you change your mind in the meantime. Do not panic ! It is quite possible to retract before a certain time, but under certain conditions. We will explain everything to you…
What is retraction?
Retractation, or withdrawal period (or cooling-off period), of a car loan is defined as the period following the signature of the contract and allows the Borrower to change his mind if wish it. The reasons for this change of opinion are variable and purely personal: decrease or increase of income, unforeseen financial contribution, change of family or professional situation, personal decision, etc.
In all cases, the law protects the Borrower (see Article L.312-19 of the Consumer Code ). In fact, it states that ‘The Borrower may withdraw without cause within fourteen calendar days after the date of acceptance of the offer of a credit agreement containing the information specified in Article L. .312-28. “(Hamon Act).
As a result, this legal authorization to retract and not follow through with the auto loan application process automatically cancels the current transaction.
To do so, simply write a letter in which is clearly notified your desire to cancel the credit application, and send it by registered mail with acknowledgment of receipt (postmarked as proof) to your bank or to the bank. lending organization.
This retraction procedure must in no case generate additional costs if the 14-day period is respected, and the credit agency must absolutely inform you of the specific conditions of withdrawal on the day of the signing of the contract.
What are the conditions to be fulfilled to retract a request for auto credit?
The request for withdrawal by registered letter is the most common way to assert its rights, but it should be noted that the majority of banks attach a withdrawal slip to the contract.
So that after accepting the offer of the loan agreement, the Borrower and the prospective guarantor may withdraw their commitment without any reason, within 14 calendar days from the date of their respective acceptance, in returning to the Lender the famous tear-off slip attached to the contract, duly dated and signed.
In no case, the exercise of this right of retraction gives rise to any registration on a file.
But from the day following the provision of funds to the Borrower and in the event of withdrawal, the borrower shall repay the lump sum to the lending institution and pay the accrued interest on that capital from the date on which the credit has been paid to him until the date on which the principal is repaid, without undue delay, and at the latest 30 calendar days after having sent the notification of the retraction to the Lender.
Interest is calculated on the basis of the lending rate on the contract. The Lender is not entitled to any other compensation paid by the Borrower in the event of withdrawal.
In other words, there are three scenarios:
- You wish to withdraw while you are waiting for the funds to be paid and the vehicle is not yet delivered : your credit application and the contract are simply canceled without any financial cost to you.
- You want to cancel the contract when your funds have already been paid between the 8th and 14th day of the withdrawal period : you can cancel everything on the condition that you pay the interest due between the date of release of funds and the date of repayment.
- You wish to withdraw when you have opted for the immediate release of the funds (which will be discussed below): you have no possibility to cancel your contract and are now obliged to honor it.
How to reduce the withdrawal period of your car loan?
In case you are perfectly sure of yourself and you are in a hurry to get your car, whether new or used, you have the opportunity to reduce the famous withdrawal period of 14 calendar days ( Article L. 312-52 of the Consumer Code ).
In order to do so, the Borrower will have to stipulate it in the contract by hand. This could be for example:
“I wish to release the funds immediately and deliver my vehicle immediately. I am informed that my request has the effect of reducing the statutory withdrawal period, but I wish to assert my rights in order to fully enjoy my car as soon as possible. “
However, this initiative aimed at reducing the period of withdrawal of the car loan is however limited to an incompressible period of 3 days before delivery of the goods. And sometimes it is not easy to wait 3 days for the most impatient of us! …