Finance Glossary

Cooling-Off Period

A legal right under UK consumer credit regulation allowing borrowers to withdraw from a loan agreement within 14 days of signing, without giving any reason. If you exercise this right you must repay the principal plus any interest that has accrued up to the point of cancellation. This right applies to most consumer credit agreements regulated by the Consumer Credit Act 1974.

Example

You take out a £500 loan on Monday. By the following Monday you decide you do not need it and invoke your 14-day cooling-off right. You repay £500 plus seven days of interest.

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