Can an Auto Dealership Cancel Sales Contract?

Can you imagine how exciting it is to finally have a car of your own after going through the long and stressful process of finding the right choice, signing the contract, paying money, etc?

And do you imagine how discouraging it is to receive a call shortly after your purchase from a car dealer who informs they are canceling the sales contract! In fact, this shouldn’t surprise you! Dealerships cancel contracts all the time, and even if your vehicle’s sale was canceled within the legally given time frame, you have certain rights you should always be aware of.

Keep scrolling to learn in what cases auto dealership can cancel sales contract and how to avoid paying more than you expect!


The 10-Day Rule

Once you sign the purchase contract and leave with the car, the dealership is going to find a finance company or bank to buy your contract. However, sometimes car dealers can’t obtain financing at the terms you agreed to!

In such cases, dealers can cancel the contract on a used vehicle but only if they notify you within 10 days of the date on the purchase contract.

But be careful! Sometimes car dealers inform consumers they are canceling the deal after the 10-day period has expired.

In such a situation, just advise the dealer they are no longer entitled to cancel the purchase contract! Once dealers see you are aware of your rights, they would neither threaten you nor persuade otherwise!


Return the Car and Get Back the Entire Down Payment

“What happens when auto dealership cancels the sales contract?” is perhaps the first question that will come to you!

In fact, a lot of dishonest dealers insist customers shouldn’t get a full refund or down payment. Never believe those dealers!

California law clearly states that if a car dealer rescinds a vehicle transaction because of an inability to obtain financing, then the dealer must repay all amounts that the consumer paid, including sales tax and any optional items included in the purchase contract.

In other words, in case the auto dealership cancels the sales contract, you must return the car, and the dealer must return your down payment as well as any other payments you have made on the car.


Consumer is Responsible for….

Bear in mind that the car dealer can’t charge you for the miles you put on the car after you leave the lot with your new purchase during the 10-day period. However, you are responsible for any physical damage to the car during the time it is in your possession.


Be Careful Before Signing the Second Contract!

Often, dishonest dealers are ready to break the law for the sake of more profit and more money. For reaching their goal, many California car dealerships tell the customer that the financing has been “approved,” the customer signs the contract, and then takes the vehicle home and shows it to his or her family and friends.

In ten days the dealer calls to cancel the transaction and tries to convince the buyer to sign a new contract. This new contract might have a higher interest rate, require a higher down payment, or require a co-signer.

Remember, no one has the right to force you to sign a new contract, and if the dealer refuses to give you back the down payment and/or trade-in, the dealer is breaking the law.

Simply put, be aware of all your rights as a consumer and you will never be a victim of auto dealer frauds!


Wrapping Up…

In any event, if you have been a victim of auto dealer fraud, and it resulted in monetary damage, contact our experienced auto fraud attorneys at Margarian law firm today for advice.

Even if the dealership just wants to cancel your contract due to financing issues, we will look into your case to determine if taking a legal action is the right choice for you!