Canceling a payday loan is possible, provided certain conditions are met. Here is what you need to know about the conditions to be met in order to cancel a payday loan.
A payday loan can only be canceled in two specific cases. The first case is where the borrower wishes to cancel his loan during the withdrawal period. The withdrawal period is a period granted to the borrower after the signing of the loan contract to reflect on his choice and possibly back off by canceling his contract.
Cancel a payday loan as part of a withdrawal
In terms of payday loan, the withdrawal period is 14 calendar days from the date of signature of the loan, in accordance with law n ° 2010-737 relating to the right of withdrawal. During this withdrawal period, the borrower can freely cancel his loan without having supporting documents to produce with his bank or credit institution. We will then speak of termination of the loan contract.
This termination may occur due to a change in situation compared to the date of signing (loss of employment, accident in life, etc.) or without specific changes.
Obviously, if the withdrawal occurs after the release of funds, it is appropriate for the borrower not to have already used all or part of the funds in order to be able to play the termination. Otherwise, the borrower will be forced to reimburse the funds already used.
Cancel a payday loan as part of a prepayment
The second scenario for canceling a payday loan is that of the early and total repayment of the loan. This possibility is envisaged by article L312-34 of the Consumer Code. This refund will not incur any costs or interest. However, penalties may be requested by the bank or the establishment depending on the terms provided in the event of early repayment.
The formality to be respected to cancel a payday loan
Whether it is a question of obtaining the cancellation of the loan within the framework of termination or early repayment, the borrower must imperatively respect a formality on the pain of not being able to obtain the expected cancellation.
In both cases, he must send a registered letter with acknowledgment of receipt in order to inform the bank or the credit institution of his desire to proceed with the cancellation of his credit.
The borrower must mention the article of law corresponding to his situation, namely lawn ° 2010-737 relating to the right of withdrawal or article L312-34 of the Consumer Code depending on the case.