Can a Buyer Cancel a Car Dealership Contract? (2022)

Can a buyer cancel a car dealership contract? The answer is sometimes, but there's more to it than that. The more you understand about car buying contracts the more confidence you can have at the dealership.

Can a Buyer Cancel a Car Dealership Contract? (1)By Hearst Autos Research
Can a Buyer Cancel a Car Dealership Contract? (2)

Can a buyer cancel a car dealership contract? The answer is sometimes, but there's more to it than that. The more you understand about car buying contracts the more confidence you can have at the dealership. Buying a new car can be an exciting time. Heading to a dealership to test drive a new vehicle for you or your family can be exciting, and that can lead to a lapse in judgment. So, what happens when you sign a buying contract for the car, but realize it may not be the best fit for you the next day?

Getting Out of a Car Purchase

One thing many people try to rely on when trying to cancel a car buying contract is a cooling-off period. A cooling-off period is something written into sales contracts that can protect the buyer in cases of high-pressure sales tactics. Many people consider shopping at a car dealership a high-pressure sales environment, however, Edmunds indicates there is not typically a cooling-off period for car purchases. Part of the reasoning for this is the value of the car. If a cooling-off were required by dealerships, they would be forced to sell practically brand-new vehicles for a fraction of the price and would likely be unable to sustain operations.

Because of how car valuation works, there is not a cooling-off period required as part of a car buying contract. If you signed your name on the dotted line for a new vehicle, it will be very difficult to return it or cancel it in most cases. This could be a different story if you're shopping for a used vehicle in-which a dealer may allow you to return the vehicle after a short period of time.

Findlaw indicates that what's called a contract cancellation option may be available to you. This addition to a sales contract may be available at an added cost to the buyer, but if it's something you feel like you might need, then it's worth asking for. The dealership is still under no obligation to offer such an addendum to buying contracts unless certain states require it.

Some states, such as Massachusetts, have other protections in place to help protect buyers from cars in poor condition. For example, if someone in Massachusetts purchases a car and it fails a safety inspection within seven days of the purchase, the buyer is allowed to return the car for a full refund. Check your state's local laws to see what protections car buyers have before trying to negotiate with a dealership as it's sure to be less of a headache.

(Video) Can A Used Car Dealership Cancel A Contract

Other similar protections include lemon laws that protect buyers from defects that the dealer is unable to repair. Lemon laws provide a wider net of protection. In Florida, for example, a buyer is covered for up to 24 months after the purchase of a new vehicle:

  • A dealership has three attempts to fix the issue and return it to the buyer.
  • If the dealership is unable to complete the repairs, the buyer must then contact the manufacturer.
  • The manufacturer then has 10 days to direct the buyer to a third-party repair shop.
  • If the independent repair shop is unable to make the necessary repairs after 30 days, the buyer is entitled to request a refund.

There are certain things you can do if you feel you've been a victim of fraud in the car buying process and there are some steps you should take in the event of fraud, starting with filing a complaint with the Attorney General of your state. If there was no fraudulent activity and you did not pay for or have the ability to purchase a contract cancellation option, your options will dwindle greatly. Pocket Sense lists a few things you can look for in that case:

  • Study the fine print on your car buying contract. Look specifically for a return policy. Some dealerships include one, but they are not common for new vehicles.
  • If you can't find anything on the contract, check in with your state's Attorney General's office to see if there are any car buying protections in your state.
  • Call the dealer and explain your situation and why you'd like to return it. They may be willing to work with you, but it's not granted and they are under no obligation to actually do so.
  • If they still aren't interested in working with you, you can try to offer them your deposit. This could sway the dealer's position at the cost of your deposit, but you would be out of the contract. Weigh your options carefully.
  • A dealership might be more apt to work with you if you are interested in another vehicle they have as well.

Canceling a New Car Purchase Agreement With a Dealership

Car buying contracts are pretty tight and per the Consumer Law Group, canceling one once you sign on the dotted line is pretty difficult. There are a few conditions that could lead to a car buying contract being canceled. One such event is called a yo-yo sale. This is when the dealership gives you the keys and has you sign the paperwork prior to having final approval on the loan terms from a lender. If the lender doesn't want to accept the deal, the contract is canceled.

You may be able to return your vehicle if the dealership misled you or didn't disclose the full history of the vehicle. Other things that would be in your favor would be if the vehicle failed a safety inspection or if there was an undisclosed mechanical issue with the vehicle.

Returning a Used Car to the Dealer

Consumer Action Law Group discusses returning a used car to a dealership and states returning a new car to the dealership is, in most cases, a lot harder to do than returning a used vehicle. Dealerships that specialize in used car sales may even advertise friendly return policies to attract potential buyers. In order to return a used vehicle, there are usually a few thresholds you need to meet:

  • It likely needs to fall under a certain amount of miles since it was bought.
  • It needs to be in the same condition.
  • You need your copies of the paperwork you signed originally.
  • The car should be free of tickets or liens.

Getting out of a car buying contract can be tricky. The more you know ahead of time can help you in the long run if you think you may want to return a vehicle purchase.

Information and research in this article verified by ASE-certified Master Technician Duane Sayaloune of For any feedback or correction requests please contact us at


(Video) When the Dealer Refuses to Cancel an Extended Warranty - Auto Fraud Lawyer Explains - Whitney, LLP

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(Video) Get Out Of Car Dealer Contract


Can I pull out of a car purchase? ›

Whether you have rushed into your agreement or you've found a better deal elsewhere, you should be able to cancel your car finance agreement for up to 14 days after you signed on the dotted line. This two-week period is known as a 'cooling off period'.

Does the 14-day cooling off period apply to cars? ›

Yes, but there are certain rules that apply. If you buy a car without seeing it in person - online, for instance - then you have a 14-day cooling-off period during which time you can return it to the dealer with a full refund. The same rules apply if you buy from an online auction.

Can I change my mind after agreeing to buy a car? ›

But you don't have the legal right to simply change your mind either before or after taking delivery. You have signed a contract and you are expected to fulfil it. A dealer may be prepared to negotiate changes to the contract in order to keep you from walking away.

Am I stuck with a car if I signed the paperwork but didn't drive it off the lot in California? ›

If You've Signed Paperwork and Want To Back Out…

If you take the car, you're probably stuck unless the dealership can't complete the deal at the agreed upon terms (eg, they can't arrange financing for some reason). If you haven't taken the car, contact the dealer board or consumer affairs board.

How do I get out of a car loan I just signed? ›

5 options to get out of a loan you can't afford
  1. Renegotiate the loan. You can reach out to your lender and negotiate a new payment plan. ...
  2. Sell the vehicle. Another strategy is to sell the car. ...
  3. Voluntary repossession. ...
  4. Refinance your loan. ...
  5. Pay off the car loan.
29 May 2022

How long do I have to change my mind after buying a car? ›

The federal cooling-off rule

You may have heard there's a three-day cooling-off period for some purchases, but in most cases, it doesn't apply to vehicles.

How long do you have to cancel a contract? ›

In general, once a contract is signed it is effective. In most situations, you do not have a time period where you have a right to rescind a contract. There are a few exceptions to this general rule. The Federal Trade Commission (“FTC”) has a 3 day, or 72 hour, cooling off period rule.

Can I cancel a car finance agreement? ›

No, you usually cannot do this. However, if you made your purchase from a dealership and want to refinance something else, they may accommodate you in the name of good business. Dealers generally aim to have you return one day when you're ready to make your next purchase, after all.

What are my rights when buying a car from a dealer? ›

Problems with cars bought from dealers

(For a used car, “satisfactory quality” takes into account the car's age and mileage.) You have a right to reject something faulty and you're entitled to a full refund within 30 days of purchase in most cases. After 30 days, you lose the short-term right to reject the goods.

Is buyers remorse normal after buying a car? ›

Car buyer's remorse entails feeling anxious, uncomfortable, or regretful about a new vehicle purchase, and it's common. The federal Cooling-Off Rule doesn't apply to most motor vehicle sales, and very few dealerships offer return policies.

Can I cancel my car finance deal within 14 days? ›

Yes, if you change your mind and no longer want to continue with your car finance agreement, you have 14 days to reject it. This time is also known as the cooling off period. Your 14 days start on either the day that you sign your agreement or the day that you received a signed copy it, whichever happened later.

Can you change your mind after signing a car lease? ›

When you sign an auto lease, you may notice a sign in the finance manager's office stating, "There is no cooling off period." Unlike a mortgage or other loan, a car lease contract is final, and there is no three-day right to rescind your contract. You cannot turn in your keys and change your mind.

Can I reject a car after 30 days? ›

Under the Consumer Rights Act 2015, you have a short term right to reject your car if it is of unsatisfactory quality, unfit for purpose or not as described. You can get a full refund. However, you should remember that this right is short-term and is only limited to 30 days from the date you brought your car.

What happens when you return a financed car? ›

If you return the car to the lender, the lender will likely sell it. It will apply the proceeds of the sale to your car loan balance, after reimbursing itself for the costs of sale and certain fees.

Can I cancel loan after signing? ›

Yes. For certain types of mortgages, after you sign your mortgage closing documents, you may be able to change your mind. You have the right to cancel, also known as the right of rescission, for most non-purchase money mortgages. A non-purchase money mortgage is a mortgage that is not used to buy the home.

Can you cancel a car loan the next day? ›

Unfortunately, you can't cancel a car loan based solely on buyer's remorse or failing to do your homework. While many people cite the Federal Trade Commission's cooling-off period, which allows you to return a purchased good after three days, it doesn't apply to cars.

Can you back out of an auto loan before closing? ›

You absolutely can cancel a car loan before signing! Since you have not signed the paperwork, you have no contractual obligation to the lender and they have no power over your decision. Simply give the lender a call and let them know you are no longer interested in signing on with them.

Can I change my mind on a purchase? ›

You don't have an automatic right to get your money back if you just change your mind about something you've bought and there's nothing wrong with it. It's the same no matter how expensive the item was - it's really down to the seller whether they offer you anything.

Does returning a car affect credit? ›

Voluntarily surrendering your vehicle will have a substantially negative impact on your credit scores because it means that you did not fulfill the original loan agreement. When you voluntarily surrender your vehicle, the lender will sell the car to recover as much of the money owed as possible.

Can you return a financed car back to the dealer the next day? ›

Some dealers have a return policy – sometimes around a seven-day guarantee when you're financing a car sight-unseen without a test drive – but most don't offer one. It doesn't hurt to give your dealer a call and ask, but most franchised dealerships don't have return policies.

What are the grounds for cancellation of a contract? ›

What Are Some Common Grounds for Contract Termination?
  • Breach of contract;
  • Impossibility or impracticability of performance;
  • Fraud, mistake, or misrepresentation;
  • Invalid or illegal contract;
  • Recission;
  • Frustration of purpose;
  • Completion of the contract; or.
  • Termination by agreement or by a provision in the contract.
9 Jun 2021

How can you legally cancel a contract? ›

To cancel a contract, take the following steps:
  1. Make sure you send the cancellation notice within the time allowed.
  2. Always cancel in writing. You can use the cancellation form or send a letter.
  3. Keep a copy of your cancellation notice or letter.
  4. Send your cancellation notice by certified mail, return receipt.

What is required to cancel a contract? ›

To cancel, you must take a written notice to the seller's place of business, saying that you are canceling the contract. The contract must tell you about your right to cancel. If you want to cancel and the contract doesn't tell you about your right to cancel, see a lawyer.

How do I cancel a car dealership contract? ›

To cancel, write a letter to the dealer and the warranty company. If you are financing your vehicle, the price you paid for the service contract may be credited to your account balance.

What legal action can be taken against the dealer? ›

Before filing a complaint before the consumer forum you are required to send a legal notice to the dealer stating reasons and your intention to sue. If the dealer does not budge to the notice then you may proceed with filing a case against him in civil court or consumer forum of competent pecuniary jurisdiction.

Can you buy your car from a dealership then turn around and sell it? ›

There is no law against selling your car after you buy it. You could walk out of the dealership, walk right back in and sell it if you wanted. Bear in mind that if you took out a loan, you might have a prepayment penalty. The only way to know if you have a prepayment penalty is to look at your loan agreement.

What is the Consumer Rights Act and how does it affect my vehicle purchase? ›

The Consumer Rights Act stipulates that dealers will only get one chance to repair or replace the product, so dealers can't make multiple attempts to fix a problem unless otherwise agreed. If they fail to remedy the fault in one attempt or within a reasonable time period, you'll be entitled to a full or partial refund.

How do I get out of buyer's remorse? ›

5 Cures for Home-Buyer's Remorse
  1. Adjust the monthly budget. If you believe you paid too much for your home or simply got in over your head, the most effective way to take control is to adjust your monthly budget. ...
  2. Imagine what "can be" ...
  3. Remember your long term goals. ...
  4. Create memories. ...
  5. Use the experience.
6 Dec 2021

What is buyers remorse period? ›

What Is the FTC's Cooling-Off Rule? The Cooling-Off Rule gives you three days to cancel certain sales made at your home, workplace, or dormitory, or at a seller's temporary location, like a hotel or motel room, convention center, fairground, or restaurant.

What is considered buyer's remorse? ›

What is buyer's remorse? Buyer's remorse is a feeling of regret or anxiety after making a purchase. It usually occurs after a person makes a significant purchase, such as a home or new car, but it can occur after smaller purchases.

Can I cancel a loan after receiving the money? ›

Contact the lender to tell them you want to cancel - this is called 'giving notice'. It's best to do this in writing but your credit agreement will tell you who to contact and how. If you've received money already then you must pay it back - the lender must give you 30 days to do this.

Does Cancelling car finance affect credit score? ›

Evidence of the terminated finance may show up on record during a credit check. However, it is unlikely to affect your credit score. If you find yourself unable to keep up with payments, you may be tempted to simply stop paying them.

Can I decline a loan after approval? ›

Do I Have to Take the Loan I've Applied For? If a lender has approved your application for a personal loan, you're not required to take it. This is an important distinction from credit cards, where your account is opened immediately upon approval.

Can you cancel after signing a car lease? ›

If your leasing company offers the option, ending your car lease early means you're released from making remaining payments on your current leased vehicle. But it also means that you have to turn in the car and pay the balance due, including any costs, fees and penalties associated with early termination.

What can happen if you lease a car and then decide to cancel the contract before it ends? ›

An early termination fee is standard and, depending on the lessor's standards and the terms of your lease agreement, may require payment of remaining lease payments, an amount equal to the difference between the remaining balance of your lease and the realized value of the car after sale, or other charges.

Can I cancel offer to purchase a car? ›

The buyer can cancel an offer to purchase, but doing so will be extremely costly. The buyer may lose their deposit. The seller may claim damages. The buyer will be liable for the agent's commission.

Can I cancel a car finance agreement? ›

No, you usually cannot do this. However, if you made your purchase from a dealership and want to refinance something else, they may accommodate you in the name of good business. Dealers generally aim to have you return one day when you're ready to make your next purchase, after all.

Can I cancel my car finance within 14 days? ›

All agreements come with a 14-day car finance cooling-off period, which means you have a legal right to withdraw from the arrangement or cancel it within the first 14 days of signing the contract. To cancel your credit agreement within the 14-day cooling-off period, you need to contact the lender directly.

Can I cancel an approved car loan? ›

You must contact the lender and request an 'early settlement figure' if you wish to cancel any credit agreement after the 14-day cooling-off period has ended. This is the total amount you'll need to pay to clear the finance agreement in full, including any interest and fees.

Can a buyer cancel a purchase agreement? ›

Cancellation of an Agreement to Sale

However, having a valid reason for cancellation is a must. A buyer is well within his rights to cancel an Agreement to Sale for reasons as below. The project is inordinately delayed. Notwithstanding, there is always a penalty will be levied on cancellation of the agreement to sale.

Can a buyer cancel an accepted offer? ›

Can a buyer back out of an accepted offer? The short answer: yes. When you sign a purchase agreement for real estate, you're legally bound to the contract terms, and you'll give the seller an upfront deposit called earnest money.

Can I cancel after accepting an offer? ›

Key Takeaways. In most cases, you can decline a job offer after you have accepted it. If you've signed an employment agreement, check the legal implications before you withdraw your acceptance. If you can, it's better to have a conversation in person or on the phone to explain why you have decided not to take the job.

How do I cancel a car dealership contract? ›

To cancel, write a letter to the dealer and the warranty company. If you are financing your vehicle, the price you paid for the service contract may be credited to your account balance.

Will I get my deposit back if I cancel my car finance? ›

The deposit is a form of security to hold the car until you are ready to pay the rest of the money and collect the vehicle. If you change your mind, you lose the deposit. Simple enough in most cases.

Can I decline a loan after approval? ›

Do I Have to Take the Loan I've Applied For? If a lender has approved your application for a personal loan, you're not required to take it. This is an important distinction from credit cards, where your account is opened immediately upon approval.

Can I return a car I just financed? ›

Unless your vendor has communicated a return policy, like a 7-day time window for changing your mind, you cannot return a car due to buyer's remorse. Once you've signed off on your financed car purchase, it's legally yours.

What happens if you change your mind on a car loan? ›

If you change your mind about the vehicle or find another car at a different dealership, you don't owe the dealership or lender anything but a courtesy call to say that you've changed your mind.


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