What is rescinding a credit transaction?
Rescinding a credit transaction means that the borrower cancels the deal. In other words, the person who applied for the loan decides that he or she does not want the loan, the service, or the product being financed. A person can rescind a credit transaction within three days for any reason or for no stated reason at all. How to rescind Unless borrowers waive their right of rescission, they have until midnight of the third business day after the transaction to cancel the contract. The first day after all three of the following events counts as day one. • The borrower signs the credit contract. • The borrower receives a Truth in Lending disclosure form that contains certain important disclosures about the credit contract. These disclosures explain the key terms of the credit being offered, such as the annual percentage rate, total finance charges, the amount financed, total payments, any balloon payment due, annual or one-time service fees, prepayment penalties, late payment fees, and t
