It is logical that when facing the purchase of a new car we go to our bank to request a loan, but in the same way it is also something more than usual that this ends in cancellation as it is not foreseeable that it can be dealt with. In these cases, to consider the issue closed, we sometimes think that returning the vehicle is enough, but, as would happen with a home, returning the keys is not enough.
Changes in our financial life, just like in our social life, are constant, and for this reason economic instabilities can arise that cause an unexpected change in our decisions. If, despite having decided on a loan for the purchase of a car, we later do not feel that we can meet its installments, or we simply discover that there is a more suitable loan, we can cancel our loan.
What is a loan?
First of all, it is convenient to recover the meaning of loan and bring it to the fore to make it clear what we mean when we talk about this type of financial product. Well, loans are a financing method designed to provide an amount of money to a client in exchange for the commitment to return it at an established time and with the added interest specified in the contract in the form of periodic payments.
These payments are the fees that the user who signs the contract with the financial institution will have to pay periodically and the amount of money will essentially be the loan that will have a series of particularities. Among these we find the early cancellation of the loan. An issue that we will see later to be prepared before signing the contractual agreement and being able to avoid penalties unwanted.
Of course, within what we know as a loan we find several types. Among them we find the mortgage, the pre-approved… But in this case, the type of loan that interests us the most is the personal one, since that is where we usually find the solutions that are usually offered to acquire a car within those known as consumer loans.
What does it entail to cancel a car loan?
cancel a car loan means the end of the financing agreement that the client has with the lender. Contrary to what is usually thought, it does not happen only at the initiative of the borrower, but also at the expense of the lender if the conditions of the contract are not respected and even if the loan has been granted in advance. As a general rule, it is usually the client who, taking advantage of the reflection period, decides to cancel it.
The usual question of whether canceling a car loan entails any penalties finds its answer in the Consumer Credit Contracts Law. It establishes a condition to cancel this loan and that is that 14 calendar days have not passed from the signing of the contract. This is important, since the time that elapses after stamping the signature is not the same as the time that elapses until the vehicle arrives home.
only in that situation You will not have to justify the reason nor will it entail any penalty economic. Of course, you will have to pay the interest that has been generated on the days that the credit was in force. In the amortization table you can find out the capital you have pending, as well as find out if you have a penalty for early cancellation. If so, you will have to add the % you have to the pending capital.
What happens if you cancel the loan early?
If you have problems making payments or simply want to change to another offer that you consider better, you can cancel the contract early, but you will have to take into account that this can entail significant costs. This type of information appears in the contract itself, but, once the decision has been made, the ideal is to cancel the contract before falling into arrears and damaging your credit image.
The possibility of canceling a loan early is an added plus, but it should be borne in mind that doing so entails expenses. This is mainly due to the fact that, from the point of view of the financial institution, it is preferable for the holder of a loan to repay the money within the term than to do it before time and lose the expected money. For this reason, the entity penalizes the client by applying a commission for early cancellation.
Favorable situations to cancel your car loan
Although canceling a car loan ends up causing us expenses, there will always be occasions when opting for this option will be a good choice. Between them:
- When you have the money to amortize the loan: the moment you have all the money you need to fully pay off the loan you requested, it may be time to pay it off and get rid of your interest.
- Whenever you want combine several loans and convert it into one: Canceling all the loans you have and consolidating them into one can help you manage it better and stick to a single debt.
- If you find a loan with better conditions: you consider that there are better offers in the market and another type of loan could be better for you even if it implies the cancellation of the one you already have.
It is also vital to be clear about the conditions of the contract since in it we will find all the necessary information to carry out these procedures properly. The text of the car loan is usually clear and the circumstances to justify a cancellation will be clearly established in its conditions. The same will happen with the derived consequences of loan cancellation.
If you have bought the car online and want to cancel it, you can do it through your distance selling right of withdrawal. To do this, contact your bank to make sure that you will not suffer penalties for returning the car. Along with this important resource, we also find the voluntary terminationa right of return established in the contract and protected by the Personal Loan Law.
conclusions
In short, canceling a car loan is an option to take into account, which entails fewer problems than it appears at first glance. It is important to attend to your period of reflection and make a decision being aware of the penalties that you may suffer in case of non-compliance with the clauses of the contract. Even so, as you will have been able to verify, there are also interesting mitigating factors.
We recommend that you read the loan contract carefully before signing, ask all the questions you consider pertinent, and keep a complete copy of the contract. In addition, to clear up any doubts regarding the damage that the vehicle could suffer, we advise you to consult a dealer to find out what is considered wear. Wear and tear is acceptable, but you will likely be charged some repair costs.
