An ancillary contract is a contract related to the main contract but is subordinate to it.
Under the Consumer Contracts Regulations, if a customer cancels the main contract, the ancillary contract is automatically cancelled and it is the trader's responsibility to notify any relevant party. For example, if a customer decided to cancel their purchase of a new car then it is the dealer's responsibility to contact any finance company who has provided finance to help fund the purchase and advise them that the finance contract has also been cancelled. Any deposits paid by the customer must also be returned.
This would normally only apply to contracts that instantly transfer vehicle ownership to the customer, such as a personal loan or other forms of unsecured finance. Secured distance credit and hire agreements such as hire purchase, personal contract purchase and personal contract hire cannot usually be cancelled, as explained at the end of this module.