Aug 2

Friday, August 2, 2019 

Recently, OMVIC received this question: “I was planning to buy a used car, but my financing didn’t get approved, can I get my deposit back?”

Let’s assume that the person who wrote this question, signed a contract and the dealer was to arrange financing. 

OMVIC’s Director of Communications, Media Relations and Education, Terry O’Keefe explains, “If dealers are arranging financing, the MVDA requires them to provide an ‘Initial Disclosure Statement’ (IDS) on the Bill of Sale The IDS will state that the financing is for _____months at ______interest rate. Those terms are now a condition of the contract. If the dealer can’t get the consumer financing based on the agreed upon terms, then the consumer basically has two options: cancel the contract because the condition wasn’t met – the dealer should return the deposit in this situation; or, see if the dealer can offer other financing that would be acceptable."

Providing written conditions on the contract (before the contract is signed) can greatly protect the consumer.

If, however the purchaser was arranging their own financing and didn’t include a condition in the contract stipulating that the purchase was “subject to financing,” getting out of that contract may be difficult….and expensive. Click here to learn more about contract cancellation.

Conditional Contracts

Conditions bring transparency to the deal between the buyer and seller. They spell out in certain terms what needs to take place before the deal is to be completed. If the condition isn't met, there is no deal and any deposit that was put down must be returned. And remember, verbal promises are very difficult to prove: conditions must be written on a contract for validity. 

An Ounce of Prevention

Think of including conditions on a contract as your ounce of prevention. If you are unsure of receiving financing for a vehicle, including that condition on a contract is imperative; however, there are other conditions consumers can ask for. Here are a few popular ones:

• Subject to a mechanic’s approval
• Subject to repairs being made
• Subject to my spouse/partner/parent’s approval


Don’t be afraid to be specific with your conditions either. For example, “Subject to financing for ___ months at a rate no higher than _____per cent, ” is much clearer than just “subject to financing.” 

Remember What is Important to You

Including conditions on a Bill of Sale isn’t mandatory and both parties have to agree to them. It is possible a dealer could refuse a customer’s condition. It is then up to the customer to decide if he/she wants to proceed with the purchase or if they want to shop at another dealer who will accommodate their condition(s). 

About OMVIC

As the regulator of motor vehicle sales in Ontario, OMVIC’s mandate is to maintain a fair and informed marketplace by protecting the rights of consumers, enhancing industry professionalism and ensuring fair, honest and open competition for registered motor vehicle dealers. Visit omvic.ca to learn more about your car-buying rights as well as additional tips for buying a car in Ontario. For car buying tips, check out the OMVIC Academy. You can view other resources such as multilingual videos and download the OMVIC Car-buying Guide.

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