When the Car Purchase Contract is Canceled

When the Car Purchase Contract is Canceled

In order to avoid becoming a dealer fraud victim, one should have certain knowledge about the most common dealer scams. In this blog we will discuss the situations when a car dealership cancels the purchase contract and the options and rights you have in those cases.

  • If the dealership cancels the purchase contract within 10 days, you get your down payment or trade-in back.

The purchase contract requires that the car dealer return to you everything given for the purchase. This includes your trade-in vehicle. If you gave a $2,000 down payment and a car as a trade-in, the car dealer must give you back both the $2,000 and the trade-in when you return the car you purchased.

Sometimes a car dealer may tell you that he has already sold your trade-in, and will offer you the value of the trade-in as listed on the purchase contract. The conditions of the purchase contract do not appear to give the car dealer this option. It requires the return of the trade-in. However, if the car dealer does sell your trade-in, at the very least, you should tell the car dealer that it has to give you whatever is the highest value for your trade-in out of either

(1) the value of the trade-in as listed on the purchase contract,

(2) the fair market value,

(3) what the car dealer received when it sold your trade-in.

  • The car dealer cannot charge you for using the car you purchased from them.

For instance, he cannot charge you for the miles put on the car during the 10-day period. However, you are responsible for any kind of damage to the car during the time it is in your possession.

  • The car dealer cannot cancel the contract after the 10-day period has expired.

If a car dealer tries to do this, you should clearly state the car dealer is no longer entitled to cancel the purchase contract, and ask the car dealer to send you a letter explaining why they think they can still cancel the purchase contract.