Your rights to vary or cancel a consumer credit contract and your rights to return products bought on credit.

You can cancel a credit contract in certain situations

You can cancel:

  • during the first five working days after you receive a disclosure document (during the cooling-off period)
  • at any time if you haven’t been given a copy of the credit contract or if the disclosure document is incorrect.

The disclosure document is a written statement by the lender that you need to read before you sign a credit contract. It says what the cost will be, including any extra charges or fees, and tells you about your right to cancel. Your right to return products bought on credit depends on whether you have picked up the products.

If you have taken them, then you still have to pay the full price for those items within 15 working days. It also depends on whether or not the lender has fully disclosed your right to cancel at the time you entered into the credit contract.

The law changed for credit contracts entered into from 6 June 2015. It only applies to contracts entered into after that date.

Read the Commerce Commission’s fact sheet on how the changes to consumer law apply to contracts(external link) .

Know your rights

You can cancel your credit contract within a set time frame from the date you receive a copy of key information in the disclosure statement under the Credit Contracts and Consumer Finance Act. This time period for cancelling or cooling off period varies if the contract was:

  • handed to you directly – you have five (5) working days to cancel
  • sent to you electronically (email, fax etc) – you have seven working days after the email / fax was sent to cancel
  • mailed to you – you have nine working days after it was posted to cancel.

Saturdays, Sundays and public holidays are not working days.

If you don’t receive a copy of the key information or it is wrong, incomplete or illegible, you can cancel at any time.

You must cancel your credit contract in writing, in any way that shows you intend to cancel or withdraw from the contract.

You can give notice to the trader or finance company by:

  • giving or posting it
  • using electronic methods, eg email if the trader or finance company has earlier agreed to receive notices this way.

The trader or finance company can charge you a fee to cover any reasonable costs involved in preparing products for sale or preparing your credit contract. These costs may cover surveys, credit reports and incidental services, such as inspections and alterations.

You can cancel for any reason within the first 5 working days of receiving key credit disclosure information.

See also:

Returning products after you cancel your credit contract

If you’ve taken the products home and the correct disclosure has been made, you can cancel your credit contract, but not the sales contract. You still have to pay the cash price of the products within 15 working days.

If you haven’t taken the products home, you can cancel your credit contract and return the products.

If you’ve taken the products home and the correct disclosure has been made, except for information on your right to cancel, you can cancel your credit contract and return the products.

If you’ve taken the products home but the correct disclosure has not been made, you can cancel your credit contract and return the products.

Keeping products or services after you cancel your credit contract

After you cancel your credit contract, you can keep the products if:

  • you have full disclosure
  • you bought property at auction
  • you’ve already received services (but you must pay the cash price or the balance owing to the finance company within 15 working days).

The finance company can charge interest at the contract rate from the day you received the products until you pay the full cash price.

Other rights to cancel that might apply

You have the right to cancel a consumer credit contract in the following situations:

  • The trader offers a ‘right of return’ guarantee so that you can change your mind.
  • The products are substantially faulty or do not substantially match the sales description.
  • You bought the products under an uninvited direct sale agreement, such as a door-to-door sale.
  • The credit contract has oppressive terms that the lender refuses to change. You can apply to the Disputes Tribunal and request that the contract be varied or cancelled.

See also:

Varying your credit contract

With any variation to your credit contract made on or after 6 June 2016, the lender must comply with the Lender Responsibility Principles. They must exercise the care, diligence and skill of a responsible lender in all their dealings with you.

You have different options if:

  • you are struggling with your loan repayments
  • a term of the loan contract is too harsh, or the lender acted unfairly
  • you were given incomplete or inaccurate information before or during the contract
  • there are problems with the products.

Contact the retailer or finance company

If the products are faulty, contact the retailer but don’t stop your loan repayments in the meantime, as you may be charged penalty interest.

When you cancel your credit contract and return products, you must do so within five working days from receiving a copy of the disclosure statement.

If you have a problem with payments, contact the finance company as soon as possible to vary or cancel the contract under the Credit Contracts Consumer Finance Act (CCCFA).

You can also apply for a hardship application where the lender can agree to:

  • reduce the amount you pay by spreading payments over a longer period
  • take a payment holiday until a future date when you can start paying again.

See also:

Next steps

If you are unable to resolve your issue directly with the retailer or finance company, our Resolve It tool has information to help you take the next steps. These may include going to the Disputes Tribunal or District Court.

Resolve it: Banking, finance and insurance

Resolve it: Faulty products and services


Need more help?

Contact us for more guidance.

If you are in financial difficulty, the Insolvency and Trustee Service(external link) and Federation of Family Budgeting Services(external link) may also be able to help.

Common situations

Cancelling a credit contract

Dan buys a side-by-side fridge-freezer for his new kitchen by credit sale. As well as the fridge-freezer, he received a copy of the contract including his right to cancel. An hour after the fridge-freezer is delivered to his home, he contacts the trader to cancel the sale. As possession has passed to Dan and he received information on his right to cancel, he can only cancel the credit part of his contract.

Incorrect disclosure

Mary buys a computer on finance terms over 18 months. She received a copy of the contract but not the right to cancel the credit contract. A month later she decides to cancel the credit contract and return the computer as it is not what she wanted. She is entitled to give written notice to the retailer and the finance company that she is cancelling the credit contract and returning the computer, as she was not advised of her right to cancel the credit contract within five working days.