Auto credit and withdrawal periodsOn November 28, 2019 by admin
For the purpose of consumer protection, the Consumer Code imposes a withdrawal period after acceptance of the car credit agreement, thus avoiding impulsive subscriptions. The loan agreement contains specific information and becomes effective when the withdrawal period has expired.
What is the right of withdrawal?
The so-called “consumption law”, resulting from the Hamon bill, came into effect on January 1, 2015. For increased protection, the withdrawal period of a purchase on credit is aligned with that of consumer credit, passing from 7 to 14 calendar days, unless the delivery of the goods is immediate.
From now on, thanks to this law, the sales contract and the loan agreement can be terminated simultaneously. This concerns personal credits as well as auto credits. The buyer can thus reconsider his decision without having to justify or pay compensation. If a deposit has been paid, it will be refunded.
“Assigned” or “Unallocated” Credit
If the loan contracted is “allocated”, ie, if it finances only the purchase of a good or the provision of a service, the buyer has 14 calendar days to retract and thus automatically terminates the contract of sale.
The right of withdrawal is reduced to 3 days if the delivery of the property is immediate. This right expires on the day of delivery if it is between 4 and 14 days. In the case of home sales, the withdrawal period remains fixed at 14 days, without the delivery date of the goods being taken into consideration.
On the other hand, if the credit subscribed is not affected, the buyer may waive the credit but not necessarily the purchase because there is a commitment to pay the property acquired. In this case, to pay the seller, the buyer will then choose another payment method.
Exercise of the right of withdrawal
All steps regarding the right of withdrawal must now be explained in a standardized information sheet given to the buyer by financial institutions during the contraction of the credit.
In addition, the contract of sale of the vehicle must stipulate, if that is the case, that an application for an affected loan has been requested from a financial institution. This is an important clarification for canceling the credit in case of cancellation of the purchase.
If the correlation with the purchase is clearly specified on the credit agreement, the court may suspend, in case of dispute, the repayment of the credit until the verdict.
The withdrawal slip
The buyer should be particularly vigilant when drafting the loan agreement. If he wishes to retract, he must complete the withdrawal form attached to the credit offer by signing and dating it, then send it by registered letter with AR within 14 calendar days of acceptance of the offer. loan.
After this period, the borrower can still refund in advance without having to pay compensation as provided for in the Consumer Code in Article L. 311-29.
What is the deadline for the release of funds?
Except in the case of an assigned credit, the borrower can not receive a payment from the credit institution until the loan transaction is definitively concluded. If the borrower has taken out a personal loan to buy his future vehicle, he must wait for the approval of the financial institution, which reserves the right to refuse the credit application.
For this purpose, the organization has a period of 7 days from the acceptance of the credit to make known its final decision.
Deadline for accepting the loan offer
As soon as the borrower receives the funds from his auto loan, the payment of the monthly installments begins. If the financial institution pays the funds before the end of the withdrawal period, the latter may only claim the refund of the amount paid without being able to receive interest, in the event that the borrower renounces his commitment.
If, on the other hand, the financial institution does not respond to the borrower’s request for credit and the borrower does not receive the funds beyond 7 days, this tacitly means that the loan offer is rejected.
Retraction case after payment of funds
In the event that the borrower changes his mind by using his right of withdrawal after the remittance of the funds, he will have to repay the entire paid-up capital and, in addition, pay the accrued interest calculated over the period from the payment to the date of repayment.
The return of the funds must be made at the latest within 30 days following the notification of the retraction. Nevertheless, the lender can not claim the payment of compensation.
Case of split payments
The funds may be paid by the lender in full or in installments. In the event of the release of split funds, the financial institution will use an intermediary account until the borrowed capital is fully used. The borrower will only pay the interest on the portion of the capital used.
The amount of this interest is in line with the credit rate. The auto loan is actually put in place when the funds are fully utilized. Refunds then begin, based on the amortization schedule stipulated in the loan agreement.