Cancelling Loan within 14 days

sandi79

Hi I took out a loan to buy a car, unfortunately the car had 2 problems within the first week so I have now returned it and been refunded. My sister says I can use her car for a few months until I find a new one.  Should I repay my loan within the 14 days and would that effect my credit score and my likelihood of being accepted for another loan in a few months?  Thanks for reading 

molerat

If you cancel the loan within the cooling off period all trace of it should be removed from your credit file but any searches will remain.

DrEskimo

No I can't see why it would, but why would you want to?

Unless you think you can get a cheaper rate in a few months, why not just keep the loan, continue to pay it down and use the money when the right car comes up.

Of course this is assuming this is an unsecured loan, and not a secured loan on the car itself!

CliveOfIndia

As above, if you're planning on buying a different car in a few months then why not just keep the money in a savings account, ready for when you need it?

Yes, there's a chance that you may possibly get a slightly better interest rate in a few months time, but I don't think the difference would be very large.  And it'll mean another search on your credit record - not the end of the world if it's a few months away from the original one, but it may have an impact if you're likely to want any other form of credit in the next few months.

born_again

sandi79 said:

Hi I took out a loan to buy a car, unfortunately the car had 2 problems within the first week so I have now returned it and been refunded. My sister says I can use her car for a few months until I find a new one.  Should I repay my loan within the 14 days and would that effect my credit score and my likelihood of being accepted for another loan in a few months?  Thanks for reading 

MSE way. Pay it off within the cooling off period. Or you are going to incur interest.

In the mean time put away the amount you would have been paying for the loan & you will need to borrow less when you find another car. 👍

Credit score means nothing to lenders. They never see it.

Clive_Woody

DrEskimo said:

No I can't see why it would, but why would you want to?

Unless you think you can get a cheaper rate in a few months, why not just keep the loan, continue to pay it down and use the money when the right car comes up.

Of course this is assuming this is an unsecured loan, and not a secured loan on the car itself!

Assuming you can resist the temptation of having a large sum of money sat in your account and will not spend this on something else and potentially need a second loan.

DrEskimo

Clive_Woody said:

DrEskimo said:

No I can't see why it would, but why would you want to?

Unless you think you can get a cheaper rate in a few months, why not just keep the loan, continue to pay it down and use the money when the right car comes up.

Of course this is assuming this is an unsecured loan, and not a secured loan on the car itself!

Assuming you can resist the temptation of having a large sum of money sat in your account and will not spend this on something else and potentially need a second loan.

Yes very true, would need discipline!

Transferring to a separate savings account would be good to avoid temptation and also save on some of the interest being paid whilst you look for your next car.