I Signed a Contract for a Car – Can I Cancel?
Aug
19
Friday, August 19, 2016
Are cooling-off periods (i.e. an opportunity to cancel a contract and get back your money) the law in Ontario or simply urban myths? Well before answering that question, let’s take a quiz to test your consumer rights knowledge.
Quiz: Test Your Consumer Rights Knowledge
If you sign a contract to join a gym that requires you to pay $50 (or more) in advance, which of the following is true:
- You can cancel within 24 hours
- You can cancel within 48 hours
- You can cancel within 10 days
- You can cancel within 20 days
- There’s no cooling-off period; you signed a legal, binding contract
If you sign a contract in your home to buy a hot water heater, which of the following is true:
- You can cancel within 24 hours
- You can cancel within 48 hours
- You can cancel within 10 days
- You can cancel within 20 days
- There’s no cooling-off period; you signed a legal, binding contract
If you sign a contract to purchase a vehicle, which of the following is true:
- You can cancel within 24 hours
- You can cancel within 48 hours
- You can cancel within 10 days
- You can cancel within 20 days
- There’s no cooling-off period; you signed a legal, binding contract
Answers
So let’s see how you did. The cooling-off period for most fitness club contracts is 10 days; that’s the law; and the right to cancel is provided by the Consumer Protection Act (CPA). The CPA also grants a 20-day cooling-off period for hot water heater contracts signed in your home. As for vehicle purchases, the cooling-off period is…a great urban myth.
“Unfortunately, the belief that there is a cooling-off period for vehicle purchases is a common misperception,” explained Terry O’Keefe, Director of Communications and Education for OMVIC, Ontario’s vehicle sales regulator. “Unless there are conditions written into the contract allowing for cancellation, there’s no cooling-off period – period.”
OMVIC recently commissioned a survey on this matter; the results even surprised the regulator. Of 800 Ontarians questioned, only 13 per cent knew there was no cooling-off period when buying a car; 44 per cent weren’t sure; the remaining 43 per cent believed there was.
So what can a consumer do if they sign a purchase agreement and then want to back out? “Be honest with the dealer,” suggests O’Keefe. “We find many dealers will cancel a contract and return a deposit as a gesture of goodwill.” But not all dealers may be so inclined, nor do they have to be. It’s perfectly acceptable for dealers to seek compensation for liquidated damages from the consumer. These are the costs the dealer will incur for letting the consumer out of the contract; they might include additional advertising or financial carrying costs. According to O’Keefe, “Liquidated damages must be reasonable and provable. If a consumer thinks the damages a dealer is claiming are unreasonable, they should contact OMVIC’s Complaints and Inquiries Team for assistance.”
So while buying from an OMVIC-Registered Dealer is unquestionably the safest way for most consumers to purchase a vehicle (buying privately comes with NO consumer protection), it’s still vital consumers educate themselves and learn to ask the right questions.
7 Car-Buying Tips:
- Ensure the salesperson understands your needs – not being listened to? Shop elsewhere.
- Take a thorough test drive – not just around the block.
- Understand “all-in” pricing – dealers cannot charge more than the advertised price (except to add HST & licensing) – should they try, shop elsewhere and report the dealer to OMVIC.
- For used vehicles: ask for or purchase a history report – consider a mechanical inspection, particularly if the vehicle is out of warranty.
- Get all conditions in writing (e.g. “subject to spouse’s approval” or “xxx to be repaired”).
- Get all disclosures in writing (e.g. “no accidents”).
- Carefully read the contract (and loan agreement) before signing – because remember, once signed, sales are FINAL.
Click here for more tips on buying a car from an OMVIC-Registered dealer.
For more information about your car-buying rights, visit omvic.ca. To contact OMVIC’s Complaints and Inquiries Team, call 1-800-943-6002x5105 or email consumers@omvic.on.ca.
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www.omvic.ca
www.ontario.ca/page/consumer-protection-ontario
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