Purchase Contract Canceling
- If you buy a car that is financed through the dealership, the dealer has a right to cancel the contract, but only if you are notified within 10 days of the date on the purchase contract.
It is based on the language of the purchase contract. Look at your purchase contract. That’s the long yellow document containing “RETAIL INSTALLMENT SALES CONTRACT” note at the top. Turn to the back of the purchase contract, and find the box with the “Seller’s Right to Cancel” note. It is at the bottom of the second column.
Car dealers are in the business of selling vehicles to consumers, not financing cars that consumers buy. So, this box advises you that after signing the purchase contract and leaving with the car, the dealership is going to find a finance company or bank to buy your contract. It gives an auto dealer the opportunity to find someone to buy your purchase contract. Most of the time this is not a problem. However, if the car dealer cannot find someone to buy your contract, it can cancel the contract. But, the car dealer must notify you within 10 days of the date on the purchase contract. If it does not, then the purchase is final and may not be canceled.
- If the car dealer exercises his/her right to cancel the purchase contract within 10 days, you are not required to sign a second contract to purchase that same car.
Let us repeat this. A car dealer cannot force you to sign a second contract. If the car dealer cancels the purchase contract within 10 days, you are obligated to return the car, and the car dealer must give you back any down payment or trade-in that you gave with the purchase.