A consumer is always at a disadvantage to a trader. The latter has more information and more experience and this means that in the sense of the law the consumer is considered “protective”. This applies to virtually all agreements, including financial services such as loans.
Quick loans and other types of loans fall within the basic rules of consumer protection. In fact, there is only one exception, and that is mortgage. A fundamental part of consumer protection is that the person who takes out a loan should be able to cancel the agreement. As a borrower, you never need to present any reason. Maybe you don’t need the loan at all? Maybe you find that you do not have to borrow as much money as you first thought? Maybe a better offer with a lower interest rate will emerge after you have signed the loan agreement?
This is what the law says
The Consumer Credit Act is the legislation that regulates lending by companies and banks to private individuals. Here in the 21st section there is a provision on the right of withdrawal. It reads as follows:
The consumer has the right to cancel the credit agreement (right of withdrawal) by submitting or sending a notice of this to the creditor within 14 days from the date specified in section 22 (withdrawal period).
The key points in the writing are that the right of withdrawal can be invoked within 14 days by the borrower notifying the lender that he or she wants to cancel the agreement. The lender is required to approve this requirement. Any agreements that in any way prevent the borrower from canceling the agreement are invalid.
What is the specific date stated in the last part of the paragraph? Well, it’s about the day the contract is signed, in other words, the day you sign the agreement. If you sign with a bank ID directly online, the cancellation deadline starts at the exact moment you enter your code. If you sign under a physical promissory note (most commonly for private loans), it is when you put the pen to the paper that the repayment period begins to run.
It doesn’t really matter what form the message has. It can be sent via e-mail, regular letter and also be notified by phone. However, email can be recommended as you will automatically save a digital copy of the message as proof.
What happens if you cancel a loan?
If the notice comes to the lender within 14 days, the effect will be that the loan has not actually been realized. Both parties must therefore regard the loan as non-existent.
The practical effect of this is that the borrower will repay the loan in full. There is a deadline to pay attention and it is 30 days from the time the message was sent. The lender, in turn, must repay any fees that were debited as a result of the loan’s origin (for example, setup fees).
However, there is a special rule when it comes to interest on the loan amount. Although the loan does not really exist, the borrower has had access to the lender’s money. This fact means that the borrower is obliged to pay interest on the amount. The interest is calculated from the time the loan is repaid to the time the repayment will be provided by the lender.
To simplify the whole process, lenders have routines in place for canceled loans. Settlements are made automatically and as a borrower you only have to pay what the lender requests.