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Can you cancel a loan application?

Written byKoyo Loans
Last Updated1st December 2022
Contents
  • In 30 seconds…
  • Introduction
  • Can you cancel a loan application?
  • How to cancel a loan application?
  • What does loan application accepted mean?
  • Does an overdraft affect loan application?
  • How much is a loan application fee?
  • How to fill out a personal loan application?
  • Conclusion

In 30 seconds…

Provided you have not signed a credit agreement, it’s relatively straightforward to cancel a loan that you’ve applied for. Simply contact the lender directly and ask them to cancel your application. If you have signed an agreement, you can cancel your loan application within 14 days, as stipulated in the Consumer Credit Act 1974. You must pay any money back that you have received within thirty days. Some lenders charge a non-refundable application fee, but others don’t. Just be mindful that every lender has different terms and conditions, so read them thoroughly before applying for a loan.

Introduction

New to the loan application process? It might seem like a daunting task, but it’s actually relatively straightforward and won’t take up too much of your time. If this is your first loan application, the following information will help you get to grips with the process. In this article, we explain some of the key aspects of personal loan applications and highlight how to successfully apply for credit from your chosen lender.

Can you cancel a loan application?

If you have submitted an application for a loan, but you have not signed any agreement, you can cancel the application. You will need to contact the lender directly and ask them to initiate the cancellation. However, you’ll need to be mindful that every lender has different terms and conditions relating to cancellations, so be sure to read up on them in advance.

You’re also allowed to cancel a loan application, if you have signed an agreement with the lender.  You can do this within 14 days of agreeing to a credit arrangement. This is known as a cooling-off period and is covered by the Consumer Credit Act 1974. Within the first fourteen days of the credit arrangement, the borrower will need to contact the lender to give them notice of the cancellation. As per the terms of the Consumer Credit Act, they’re obliged to accept the cancellation, and you don’t have to give a reason.

If you have already received the money in your bank account, you must pay it back within 30 days to the lender, including any interest that has accumulated since receiving the money. One important thing to note is that if you cancel a loan application, your credit score is likely to take a dip, at least in the short term. So, make sure you actually need a personal loan before submitting an application to save yourself any future hassle.

How to cancel a loan application?

Cancelling a loan application is relatively straightforward, but the exact cancellation process will depend on the terms and conditions of the lender.

As mentioned above, the Consumer Credit Act 1974 allows you to cancel a loan application either before signing the credit agreement or within the first 14 days of the credit agreement starting. You’re not required to tell the lender why you want to cancel your loan application, but you do need to make it crystal clear that you want to cancel..

If you’re struggling to cancel a loan application that you’ve made to a lender, you can seek advice and support from the Citizens Advice Bureau. However, the earlier you contact the lender and initiate the cancellation, the easier the process will be. Again, it’s much better to only start a loan application when you’re 100% sure that you need the money, as cancelling an application will negatively impact your credit score.

What does loan application accepted mean?

If you receive a notification from a lender that your loan application has been accepted, it means that you’re approved for credit. In other words, you have passed the application process, and you are eligible to borrow the money that you’ve applied for.

However, just because you have been approved for a loan, it doesn’t mean that you need to take it. This is notably different from credit cards, which open immediately after approval. Once your loan application is accepted, it’s up to you whether you enter into the credit arrangement as proposed by the lender. You will be offered terms that disclose the interest payments and fees, which you should read carefully before accepting or rejecting the offer of credit.

While it’s possible to apply to multiple lenders simultaneously, doing so isn’t a smart move. Every time you submit a loan application, the lender couldl trigger a hard inquiry on your credit report. Multiple hard inquiries in a short space of time are seen as a sign of financial distress and will negatively impact your credit score. So, it’s best to research the ideal lender for your circumstances before submitting an application when you know that you wish to proceed with the credit agreement.

Does an overdraft affect loan application?

Having an overdraft may affect your loan application. However, it depends on whether you’re in an authorised or unauthorised overdraft, as well as various other factors that are likely to influence your credit score.

An authorised overdraft is one that you have pre-arranged with your bank. In most instances, it won’t negatively affect your credit score. However, an unauthorised overdraft is much more expensive and hasn’t been pre-arranged. Relying on an unauthorised overdraft could be construed by lenders as financial hardship or mismanagement, which may negatively influence your credit score.

It’s important to note that your overdraft will appear on your credit file as a debt. But if you clear it every month and don’t go into an unauthorised overdraft, it’s unlikely to cause you issues when you’re applying for other forms of credit. Just like other aspects of your finances, your overdraft is only likely to cause you problems if things get out of hand and you don’t meet the payments required by your bank.

How much is a loan application fee?

Loan application fees vary from lender to lender. Typically, they’re not overly expensive and aren’t likely to exceed £50. However, you should research the various loans available to you before deciding on the best product for your financial circumstances.

In addition to a loan application fee, banks and online lenders charge other fees, including origination fees, late payment fees, and prepayment penalties, all of which add up to the overall cost of the loan that you’re planning to take out. You should consider the associated fees alongside your interest payments, as they all contribute to how much you are required to pay back.

The total fees and interest charged as part of a loan are given as APR – annual percentage rating – which allows you to work out how much you are required to pay back each year. At Koyo Loans, we offer competitive, unsecured personal loans with a 24.9% APR Representative. It’s crucial to understand the APR of a loan before signing a credit agreement, as you don’t want to be stung by hidden fees and charges as the loan progresses.

How to fill out a personal loan application?

Filling out a personal loan application is relatively straightforward, especially with Koyo Loans. Your first task is to check that you meet the eligibility requirements set by the lender. These will be listed on the lender’s website, and you need to ensure you meet them all before applying.

For instance, to be eligible for a personal loan from Koyo Loans, you must be over 21, be a UK resident for at least six months, not be bankrupt, have no CCJs or history of bad credit, have a mobile phone, receive a regular income, and not be self-employed. Provided you meet the criteria, you can proceed with a simple online application that takes just three minutes to complete.

A personal loan application requires you to enter your personal details, and it’s vital that the information that you provide is up to date and accurate. Any mistakes on your application form could lead to rejection or delays, so double-check the details that you enter before submitting the form. Once you’ve completed the form, you can submit it to the lender and wait back to hear whether your application is successful.

Conclusion

Before you submit a personal loan application, make sure you meet the eligibility requirements stipulated by the lender. You should also read the terms and conditions of the loan carefully, so you understand all the fees associated with the loan application. Hopefully, this article has answered some of your most pressing questions and will help you submit a successful personal loan application.

Koyo Loans is the trading name of BETR Technology Ltd. Company No. 11483187. Registered Office: Huckletree Soho, Ingestre Court, Ingestre Place, London, W1f 0JL

Key Takeaways

Cancelling a loan application isn’t usually complicated. Contact the lender and inform them that you no longer wish to proceed with the application. However, if you have signed an agreement, you can cancel your loan application within the first 14 days. This is known as the cooling-off period and is protected by the Consumer Credit Act 1974.

Should you cancel a loan application within this timeframe, you must repay all the money that you have borrowed within thirty days. Some lenders charge a cancellation fee, so you will need to read the terms and conditions carefully to see whether you will be charged for cancelling your loan. You should contact your lender in writing and ask them to initiate the cancellation as and when you’re aware of the terms and conditions.

If you’re struggling to cancel a loan, contact a trusted third party like the Citizens Advice Bureau for further guidance on how to proceed with your cancellation. Every lender will deal with cancellation requests differently after the 14-day cooling-off period, so you will need to get in touch with the lender to discuss your options.

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