Cancelling a Car Loan After Approval: Your Options & What to Know

There are few things as exciting in life as driving a new car off the lot. But once the high of a new vehicle wears off, buyer's remorse can easily kick in. In fact, one AutoTrader survey found that two-thirds of consumers have experienced buyer's remorse after purchasing a car. But once you've signed the papers and the loan approval has gone through, it's too late to turn back. Or is it? In fact, if your buyer's remorse kicks in early enough, you might have a few options to try if you regret purchasing a vehicle.

Speak to the Dealer

If you have changed your mind about your purchase, the first step is to read the fine print on any contracts you've signed. Some dealers offer buyers the right to cancel, calling it a "cooling-off period" or a "no questions asked" return policy. If such wording doesn't exist, check local laws to determine if dealers are required to offer a right to cancel within a certain number of days. In most states, there is no such requirement.

The best approach to getting a dealer to accept the return is to simply explain that you've changed your mind about the purchase. Some of the more reputable dealers will allow it, realizing that good customer service is more important than one sale. But if the dealer still says no, offer to negotiate by paying the interest you owe or the first month's payment.

Other Options

Unfortunately, all too often you'll likely find the dealer is not willing to take the vehicle back after the loan is approved. If that's the case, contact the bank to determine the full amount you'll need to pay off the loan in full. Then sell the car to get as close as possible to what you owe. You'll likely be able to get more selling it on your own than offering it to a dealer since their priority is to make a profit on the deal.

If all else fails, you can opt for voluntary repossession, which is slightly better for your credit than defaulting on your loan and allowing the bank to take it. If you think you won't be able to afford the payments and you can't get enough for it to pay what you owe, refinancing your loan for lower payments may be a credit-saving option.

Once a car sale is finalized, it can be difficult to get out of the purchase. However, car dealerships have an interest in maintaining good reputations, so it can never hurt to ask to return it. Sometimes dealerships will work with customers in these situations.