Can You Cancel a Car Finance Agreement

David Majedi

Dec 21, 2021

Have you ever bought something and after a day or two felt as if you had made a mistake? For most small purchases you make this isn’t a problem and you can likely return it. But when it comes to buying a car, things can get a bit more complicated. This is especially true if you have financed a vehicle and still owe a balance.

Whether your financial circumstances have abruptly changed, or you simply no longer want the car you’ve bought, there are many reasons to want to stop financing. But what can you do about it? At Autorama, we are the used car dealership Toronto residents rely on.  We work hard to ensure our customers love both their car and their financing option. But when things go wrong, we want you to understand your options. In this article, we help you understand your next steps when you want to get out of a car loan.

How To End a Car Loan Agreement

Your car loan agreement ends when you have paid off your car or have refinanced. The following options are your best bet when looking to change your financing situation.

Pay the Loan in Full – the most straightforward way to end an auto financing agreement is to pay off the loan in full. If you’ve recently come into extra money and are looking to save on interest, this can be a good choice. Keep in mind that some lenders may have penalties for paying off a loan early. Be sure to understand the conditions of your loan when looking to pay a lump-sum payment, so there are no surprises when it comes time to pay.

Refinance – if you are looking to get out of an auto loan because your payments have become too expensive, refinancing may be a good option. If you had poor credit when you purchased your vehicle and have now increased your credit score, you might be able to qualify for a lower interest rate. Increasing the length of your loan or even adding a co-signer to your loan can also help to reduce your monthly payment. Our post, What Credit Score is Needed to Finance a Car, offers insight into knowing how your credit score may impact your refinancing request.

Sell Your Vehicle – selling your vehicle and paying off the loan is another way to end your financing agreement. When you sell your car, your loan still needs to be paid. If you are looking to sell your car privately or back to the dealership you bought it from, be sure you understand any penalties associated with paying your loan off early. Our post, Can You Return a Financed Car Back to the Dealer, outlines what you should know about this potential option for ending your financing agreement.

Trade-In Your Vehicle – if your circumstances have changed and you now need a larger (or smaller) vehicle, trading in your current vehicle can be a good choice. In some cases, you may owe more on your vehicle than what it is worth. In this scenario, negative equity can be carried forward when you purchase your new car. Our post, What Happens When You Trade in a Car You are Still Financing, can help you understand what to expect when this happens.

Is There a Cooling-Off Period When Buying a Car?

When it comes time to finance a car our customers sometimes ask, can you cancel a car finance agreement within 14 days? When it comes time to buy a used car or new car, you’ll want to know your rights as a car buyer in Ontario. Though some types of financing agreements may allow for a cooling-off period where you can cancel the agreement, this is not a right and there is no cooling-off period required by law. You’ll want to be clear on the terms of your financing and be confident about your vehicle choice as the dealership or private seller has no obligation to take the car back.

Can I Return My Car To The Dealership?

Some car dealerships may have a policy in place to take back a car after a short period of time has passed. It is important to understand the terms of your purchase as well as the terms of your financing agreement before you make a purchase.

Have questions about the car financing process? Contact a member of our expert sales team. We will work one-on-one to ensure you find a car you love and a financing option that truly works for you. We want you to feel great about buying a car. Get started by applying for financing online and see why we have the used car for sale that you’ve been waiting for.  

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David Majedi

David brings a decade of experience to his role as Finance Manager at Autorama. Having served a diverse clientele with unique financing needs over the years, he has gained comprehensive knowledge of the market and forged created relationships with all lenders, including banks and private lenders.

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