Can car dealer back out of deal once contract has been signed?

January 21, 2016 13:11 by Consumer Ed

Dear Consumer Ed:

Yesterday afternoon I purchased a new car and was able to get a great deal.  However, today I received a voicemail from the dealer, asking me to come back in to discuss the deal.  From his tone, I assumed they didn't make any money on the deal.  Regardless, the contract was signed and accepted.  I took delivery of the vehicle and paid them on the spot, with a check from my bank. Can the dealership back out of this deal or demand more money?

Consumer Ed says:  

This sounds like a case of “seller’s remorse.” Generally speaking, there is no “cooling off period” – i.e., a legal right to cancel a vehicle purchase contract for either the buyer or the seller. Once all of the requirements for completion of the transaction are satisfied and you have signed the necessary paperwork, you have bought the vehicle. However, it is important that you read all of your vehicle purchase documents carefully. Although unlikely, if the dealership retained the right to back out of the contract, if the contract provides a basis for modifying certain terms later on, or if some event or act must occur in order to finalize the deal, the wording of the contract should include those provisions.  If such provisions are not contained in your contract, it would appear that your transaction is complete, and therefore the seller should not be able to change the terms of the agreement once it has been signed.  If the seller tries to change the terms, you need to consult with an attorney before agreeing or taking any action.


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Can a dealership claim a deposit is non-refundable if it's not in writing?

May 27, 2015 13:28 by Consumer Ed

Dear Consumer Ed:

Can a dealership claim a deposit is non-refundable if there was no written agreement and those terms are not explicitly written on their website?

Consumer Ed says: 

Generally, verbal contracts for transactions that are more than $500 are voidable (such agreements are usually required to be in writing).  However, if there were any circumstances that would make your oral agreement enforceable, the terms of such an agreement would be found in your discussion with the dealer.  You don’t indicate how you came to pay the dealer this deposit.  Even though there was no written agreement, a deposit can be understood as either money paid in anticipation of delivery of the vehicle or, under some circumstances, money paid to the dealer for its services rendered in finding you a car.  The dealer is likely taking the latter stance. However, if the terms under which you paid the deposit did not specify whether it was a deposit or a charge for the dealer’s services, the likely presumption is that you were paying the funds in anticipation of the sale going through; that is, as a deposit.  If you also agreed that the funds would be returned in the event the sale fell through, then the dealer should be required to refund the money.

Given this information, if you believe that the dealer in this case has no right to keep your deposit, you have several options.  First, you should write a letter to the dealership clearly explaining the situation and requesting a full refund of your money.  You could also submit a complaint to the Better Business Bureau (www.bbb.org) to receive help obtaining a resolution and to warn other consumers about the dealership’s practice.  You can also submit a detailed complaint to the Georgia Department of Law’s Consumer Protection Unit (www.consumer.ga.gov), which is responsible for investigating violations of the Fair Business Practices Act.  If the dealer continues to refuse to refund your money, you may also want to speak with an attorney regarding possible actions you could take.  The State Bar of Georgia (www.gabar.org) provides information to help you locate an attorney in your area that can assist you.

To avoid such pitfalls in the future, before you start shopping for a car, make sure you select a reputable auto dealer.  You can research dealerships through the Better Business Bureau’s website, www.bbb.org, to help you avoid doing business with companies that use these tactics.  When purchasing a vehicle,do not take possession of it until your financing has final approval from the lender.  Rather than obtaining financing at the dealership, consider applying for financing through your bank or credit union before you start shopping.  This will allow you to know in advance that you are approved for the loan and it will make negotiations much easier.  You should also require that the dealer put everything in writing.  If you are going to place a deposit with a dealer, you should obtain or yourself create a written document stating the purpose of the money and under what circumstances you are entitled to a partial or full refund.

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Elderly parent conned into purchasing extended vehicle warranty

April 7, 2015 15:43 by Consumer Ed

Dear Consumer Ed:

I came across a $395 charge on my 88 year-old father’s Visa card statement.  My father has dementia, and was conned into purchasing an extended warranty on his 2011 vehicle.  My father will be charged $160 per month for the next 18 months.  I have contacted the business directly, but the issue has not been resolved. What can I do, and how can I help prevent this kind of thing from happening in the future? 

Consumer Ed says:

If your father is in fact mentally incompetent, then there may be an issue as to his capacity to enter a legally binding agreement.  Whether the business actually understood your father’s condition at the time it sold your father the extended warranty isn’t clear, but if his condition is obvious, or there are other ways you can prove that the business knew or should have known this at the time of the transaction, then the business may have been acting in an unfair or deceptive manner in violation of Georgia’s Fair Business Practices Act (“FBPA”). If you believe this is the case, you should seek the assistance of an attorney.  Additionally, you may file a complaint with the Georgia Department of Law’s Consumer Protection Unit at www.consumer.ga.gov or by calling 404-651-8600.

As far as your options for preventing this type of situation going forward, you may want to consider becoming your father’s guardian in some capacity.  The Division of Aging Services within the Georgia Department of Health and Human Services has compiled a summary of guardianship law in Georgia that you may find helpful.  You can contact them at www.aging.georgia.gov or by calling 404-657-5258 (toll-free at 1-866-552-4464).

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