You must notify your lender in writing that you are cancelling the loan contract and exercising your right to rescind. You may use the form provided to you by your lender or a letter. You can't rescind just by calling or visiting the lender.
It is possible to cancel a personal loan after signing the loan agreement. But ultimately, it depends on the lender's terms and when you choose to cancel.
The Legal Consequences of Breaching a Contract
If you're found guilty of breaching a contract, the court will order you to pay damages to the other party. The amount of damages will depend on the severity of the breach and how much the other party has lost because of it.
Once you've defaulted, the lender may accelerate your loan, requiring you to pay the entire remaining balance. At that point, you could try to negotiate with your lender. But if you can't come to an agreement, the lender may opt to foreclose on the property after 120 days of non-payment.
Lack of legal capacity
For a contract to be legally binding, the parties signing the agreement should be of legal capacity. Meaning the individual should be capable of understanding what they are agreeing to. Lack of legal capacity makes a contract null and void.
Failing to pay could result in your account going into default, the balance being sent to collections, your lender taking legal action against you and your credit score dropping significantly.
You may be held liable for monetary damages if you breach a contract. There are three different types of monetary damages: expected damages, reliance damages, and restitution damages. Collectively these are known as “compensatory damages.”
Contract law disputes that end up in court are litigated as civil cases. That is, they involve a disagreement between private parties as opposed to society as a whole. Therefore, someone who breaches a contract will not go to jail for that breach.
There are different types of contract breaches, including a minor or material breach and an actual or anticipatory breach. A breach of contract is not considered a crime or even tort and rarely results in extra monetary compensation.
Being accepted does not mean that you have to accept the money. Instead, it simply means the lender has accepted your application and is willing to loan you the funds you applied for in the form of a loan. Fortunately, choosing not to accept a loan that you are approved for does not yield any consequences on your end.
Pre-closure charges
Pre-payment charges: Typically, a lender may charge a percentage of the outstanding loan amount as a pre-closure fee. Axis Bank, however, levies a reasonable charge of 2% plus applicable GST on the principal outstanding for pre-payment for the loans above 36 months.
The agreement dictates new terms and actions to be met. If not navigated well, it can result in financial penalties, a recall of the loan, or even legal action.
The best way to end a contract early is to speak with the party you're in contract with. Simple negotiation is often all it takes to reach a favorable resolution. If they don't agree to ending the contract early, consider getting a lawyer to help you determine your next best step.
You have the right to cancel a credit agreement if it's covered by the Consumer Credit Act 1974. You're allowed to cancel within 14 days - this is often called a 'cooling off' period.
There are three different courses of action available to the court. Firstly, damages may be awarded to put the claimant in the position they should have been in, had the contract terms been carried out correctly. Secondly, where the breach is repudiatory, the contract can be terminated. Damages may also be payable.
What Type of Damages May You Seek? In a breach of contract case, damages typically cannot exceed four times the actual losses. However, the exact amount depends on the specifics of your case. Consult with a lawyer to determine the potential damages you may recover.
If a party doesn't do what the contract says they must do, the other party can sue.
If, however, a party significantly or materially breaches a contract then the other party is entitled to either force the breaching party to perform his or her responsibilities pursuant to the contract or to pay damages for the breach.
You may be taken to court
On that note, you can be sued for not paying back a payday loan, even if the loan amount is small.
If you don't pay an unsecured loan, you might face late fees and higher interest rates, and your credit score could drop. Debt collectors might call you and send letters.
Make the Call. One of the best things you can do to improve your situation is to call your lender. Chances are they'll be willing to work with you if you're struggling to make your payments. That's especially true during a recession, natural disaster, or other large scale event with an economic impact.