Trade-in Description and Acceptance of Terms
Oct
29
Thursday, October 29, 2020
In our final Understanding Contract series, we’ll finish by reviewing two final sections.
Trade-In Description
This section should be filled out if you are trading in a vehicle. It will include your vehicle’s details (e.g. VIN, mileage), the amount the dealer is paying for your old vehicle, and information about any outstanding loan balances.
The Acceptance of Terms
This is the shortest section of a contract, but arguably, the most important. Both you and the dealer will sign here meaning you are legally agreeing to purchase the vehicle based on the contract’s terms.
REMEMBER: Once you sign, the contract is FINAL. There is no cooling off period in Ontario, so be absolutely certain you want to purchase the vehicle and are comfortable with the price and terms BEFORE you sign!
Each term in the sample contract is numbered so it corresponds with the numbered definition below.
1. V.I.N.: The Vehicle Identification Number (VIN) is 17 numbers and letters unique to the vehicle. It is your car’s fingerprint; no two cars will have the same VIN. It identifies the model year – even the country of manufacture. You should verify the VIN written on the contract matches the VIN on the car. You can usually find the VIN on the door frame, or at the bottom of the car’s windshield. If you can’t locate it, ask the dealer or salesperson to help you find it.
2. Daily Rental/Police or Emergency Vehicle/Taxi or Limousine: When you’re buying a used car, dealers must state whether the car was previously used as a daily rental (unless subsequently owned by someone other than the rental company and dealer), a police or emergency vehicle or as a taxi or limousine. Writing this information on a contract is mandatory (if applicable). If the dealer doesn’t disclose this, you have the legal right to cancel the contract within 90 days of delivery .
Learn more about mandatory disclosures on OMVIC’s website
3. Year: This refers to the model year of the car. Some manufacturers release models early. Historically new model years often arrive in the fall, so in fall 2020 you might see 2021 vehicles for sale. To verify that the correct year is on the contract, you can also check the VIN.
4. Make: The manufacturer’s name (e.g., Toyota, Volvo, Subaru).
5. Body Type: This refers to the car’s shape. There are 9 classic vehicle body types: sedan, hatchback, coupe, convertible, truck, station wagon, van, SUV, crossover.
6. Model: This is the specific car designed by the auto manufacturer like the Subaru Outback (Outback is the model; Subaru is the make).
7. Colour: The vehicle’s colour.
8. H.S.T. Registrant Number: This is the HST number assigned to the dealer.
9. Vehicle to be traded in on: This is your old vehicle you are putting toward the purchase of your new vehicle.
10. H.S.T. on trade in: This is the HST you pay after the money from your trade-in is deducted. For example, if you’re buying a $25,000 vehicle and the dealer gives you $10,000 for your trade-in, you only pay HST on the difference: $15,000.
11. Distance travelled: The dealer should check the odometer and enter the number on the contract. If you are buying a used car and the dealer or salesperson can’t determine the exact distance travelled, a special disclosure statement should be written on the contract. For used vehicles, the dealer may be within 1,000 kms or 5% (whichever is less) of the actual number.
12. Lien holder: The lien holder on a vehicle (trade-in) is typically a finance company (the lender). To clear the lien, the owner must pay off the lender. This money is often included in the loan for the new vehicle being purchased. To learn more about liens read the blog post “A Lien on a Vehicle”
13. Amount of Outstanding Lien: This is the unpaid balance remaining on your trade-in vehicle.
14. Remarks: This is where dealers include the vehicles’ accident history or any information about the car you told the dealer is important to you and will affect your decision to buy the vehicle, for example if the car has been in a minor fender bender.
The remarks section is also where the dealer will write any conditions you set to determine whether you will complete the purchase (e.g. subject to partner’s approval). Everything written in this area must be clear, comprehensible, and prominent. If there isn’t enough space for all the information, a page can be attached to the contract.
15. Acceptance of Terms: We said it before, and we’ll say it againꟷ this is the most important part of the contract.
Only agree to sign your name if you understand and agree with everything on the contract. Once you and the dealer sign it, it becomes a legally binding document stating that you have agreed to purchase the vehicle. Be sure before you sign!
Please bear in mind that not all the terms described may appear in your contract. Contracts vary depending on whether you’re leasing or buying a used or new car. This glossary is meant to provide a general overview.
If you have questions about contracts, reach out to Contact OMVIC’s Complaints and Inquiries Department by phone at 1-800-943-6002 x3942 or email: consumers@omvic.on.ca
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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