How to Get Out of a Car Purchase: Is There a Cooling-Off Period?

If you are wondering how to get out of a car purchase, your first thought may have been to invoke the federal "cooling-off rule." But this rule, which allows consumers to cancel certain sales transactions within three days as a protection against high-pressure sales tactics, does not cover car purchases. While negotiating with a car dealer is often described as a high-pressure situation, cars lose a tremendous amount of value the moment they are driven off the lot. Therefore, allowing a cooling-off period would force dealers to sell virtually new cars at sharply reduced resale prices.

Car Purchase Contracts and Cancellation Agreements

Instead, it's really important for car buyers to fully understand the terms of the contract, including optional fee-based cancellation agreements, before signing on the dotted line.

Some state laws require dealers to offer extra protections for used car buyers, which serve as incentives to buy. In California, for example, car dealers are required to inform consumers about Contract Cancellation Option Agreements for used cars costing less than $40,000. These agreements, which cost roughly $250 for a car listed at between $10,000 and $30,000, allow the buyer to return the vehicle within two days if they have a change of heart.

Defective Cars and Illegal Sales Tactics

Most other protections for car purchases pertain only to defective automobiles or illegal sales tactics. For example, Massachusetts law requires used car dealers to provide a full refund if an automobile fails to pass a safety inspection test within the first seven days after the buyer takes delivery (the point at which the new owner drives it off the dealer's lot). Additionally, many states have agencies tasked with mediating disputes between buyers and dealers.

Lemon laws protect new car buyers from defects that the dealer is unable to repair. So while they don't offer a way for buyers who simply change their mind, these laws do offer protections against defective vehicles. See "Lemon Law Basics" for more information, including a state-specific lemon law guide.

 Florida lemon law, for example, requires consumers to have first reported a defect to the dealer or manufacturer within 24 months of taking delivery. If the dealer is unable to fix the car after three attempts, the consumer must contact the manufacturer, which has 10 days to direct the consumer to an independent repair facility. If the car is not fixed by the third-party repair facility within 30 days, the consumer may seek a refund.

If you believe the dealership where you purchased your automobile engaged in fraud or failed to live up to its contractual obligations, then you may consider filing a formal complaint with your state's attorney general's office. Also, never assume your car is covered by a warranty and make sure any such guarantee is spelled out in the sales contract.

If you were not subject to fraud, the car is not defective, and you did not purchase an option to cancel the sale, it may be very difficult to get out of a contract. But you still may have options if you are wondering how to get out of a car purchase. In the absence of cooling-off periods for car purchases, some dealerships will make exceptions; so it never hurts to ask.