Can you return a car after buying it? Cooling-off rules explained

Many people believe there is a three-day window to return a car. In most cases there isn't. Once you sign, the deal is usually final unless the contract itself gives you a way out or the law gives you a specific right. Here is how the rules work in the US, Canada and Australia, and what to check before you sign.

In the US: the three-day rule rarely applies to cars

The FTC's Cooling-Off Rule gives you three days to cancel certain sales made at your home, workplace or dormitory, or at temporary locations such as hotels and fairgrounds. Your right lasts until midnight of the third business day after the sale.

It does not cover sales completed at the seller's permanent place of business, which is where most car deals happen. It also excludes cars, vans, trucks and other motor vehicles sold at temporary locations if the seller has at least one permanent place of business. So a car bought at a dealership, or at a tent sale run by a dealer, is generally outside the rule.

Some states have their own rules on returns or contract cancellation options, and some dealers offer return policies of their own. If one is offered, get the terms in writing: how many days, how many miles, what fees apply and what condition the car must be in. Your state AG's consumer protection office can tell you what applies where you live.

In Ontario: no cooling-off period

The Government of Ontario says there is no cooling-off period for motor vehicle contracts. OMVIC, the dealer regulator, puts it simply: the sale is final once a contract is signed.

There are narrow exceptions. Ontario says that if certain required information is missing from the contract, you have 90 days to cancel. The list includes items such as the odometer reading, the make, model and year, branding as salvage or rebuilt, and past use as a taxi or rental.

Deposits work differently before and after signing. OMVIC says that before a contract is signed, the dealer must return your deposit on request. After you sign, if the dealer agrees to cancel, it may claim liquidated damages and may keep some or all of your deposit. Rules in other provinces differ, so check with your provincial dealer regulator or consumer affairs office.

In NSW, Australia: one business day with dealer finance

NSW has a short cooling-off period, but only in one situation. The NSW Government says a one-day, waivable cooling-off period applies to new and used cars bought with linked credit, which means finance provided or arranged by the dealer selling the car.

To cancel, you give the dealer signed written notice within that business day. You must pay the dealer $250 or two per cent of the purchase price, whichever is less. You can also be asked to waive the cooling-off period. Read anything labeled a waiver before you sign it, because it gives up that right.

If you pay cash or arrange your own loan, this cooling-off right may not apply. Other states and territories have their own rules, so check with your local fair trading or consumer affairs agency.

When a car turns out to be faulty

A cooling-off period is about changing your mind. A faulty car is a separate question. In the US, check the Buyers Guide on a used car and any warranty you received. In Australia, the NSW Government says cars bought from dealers come with automatic rights under the Australian Consumer Law that cannot be restricted or excluded, and NSW law gives many used cars from licensed dealers built-in cover for defects. Private sales are generally not covered by those rules.

How to keep an exit before you sign

Because most deals are final at signing, the time to protect yourself is before. Some ways to do that:

• Ask whether there is any return or cancellation policy, and get it on the contract.

• Write conditions into the contract, such as "subject to financing approval" or "subject to inspection." OMVIC notes that sales are final unless the contract includes a condition allowing cancellation.

• Take the paperwork home or ask for time to read it.

• Arrange an independent inspection before you sign, not after.

• Check the finance terms on the contract, not only the monthly payment. Our guide to working out the out-the-door price helps you check the total.

A sample clause from fictional Northgate Motors:

This agreement is conditional on the buyer obtaining financing at an APR of 7.9% or less within 3 business days. If financing is not obtained, the agreement is cancelled and the deposit is refunded in full.

Wording like this is something you negotiate. Whether a dealer accepts it is up to the dealer.

Questions to ask before you sign

• Is there any cooling-off or return period on this sale?

• If I change my mind before signing, will my deposit come back in full?

• Can we add a condition for financing or an inspection?

• Is the financing final, or could the terms change after I take the car?

• Am I being asked to waive any right?

Get a second pair of eyes before you sign

EasyToDecode is launching soon. You will be able to upload the contract or offer and see the conditions, deposit terms, cancellation wording and finance terms pulled out and quoted, with questions to send the dealer before you commit. See how it works or join the waitlist.