Dealer’s Right to Cancel

ACTION ALERT !  BERORE YOU READ ANY FURTHER –

Save YOUR right to fight back against greedy auto manufacturers. Save California’s auto lemon law – act NOW!!

Greedy, unethical auto manufacturers who produce seriously defective vehicles are attacking California’s auto lemon law. Again. They want to take away your right to fight back in court.  They are backing SB 71, an anti-consumer bill that has passed in the legislature and is now on Governor Newsom’s desk. He may sign or veto it at any time, until October 14.  This is the worst attack against California’s auto lemon law in decades.  Pro-consumer / auto safety non-profits are fighting back. Here’s their letter urging Governor Newsom to VETO SB 71. 

What can you to make YOUR voice heard and save California’s auto lemon law, so you can fight back when your “dream car” turns out to be a lemon?

Send a brief personalized e-mail message to Governor Newsom,click here.   Under topic, choose “An active bill” and then “SB 71”.  Let him know that you live in California and urge him to VETO SB 71. Then use your own words to explain why. For example, “I spent over $30,000 to buy a brand new car, and it was in the shop for repairs for over two months. Ford refuses to buy it back.  California needs a strong auto lemon law. Don’t weaken it. I urge you to VETO SB 71.”

The 10-Day Rule: When can sellers cancel a car dealership financed contract?

DID A CALIFORNIA CAR DEALER LIE ABOUT YOUR CAR HAVING BEEN IN ACCIDENT, BODY OR MECHANICAL DAMAGE & DEFECTS, USED AS A RENTAL OR MANY MORE THINGS; OR YOUR CONTRACT IS NOT WHAT WAS PROMISED –

REACH OUT BEFORE ACCEPTING ANY SETTLEMENT OFFER OR TRADING IN YOUR CAR.

If you buy a car that is financed through the dealership, the dealer CAN cancel the contract, but only if it notifies you within 10 days of the date on the purchase contract. This type of financing is sometimes called a “spot delivery.” It is based on the language of the purchase contract. Look at your purchase contract. That’s the long yellow document that says “RETAIL INSTALLMENT SALES CONTRACT” at the top. Turn to the back of the purchase contract, and find the box that says “Seller’s Right to Cancel.” It is at the bottom of the second column.

Car dealers are in the business of selling cars to consumers, not financing cars that consumers buy. So, this box advises you that after you sign the purchase contract and leave with the car, the dealership is going to find a finance company or bank to buy your contract. This language gives a car dealer the opportunity to find someone to buy your purchase contract. Most of the time this is not a problem. However, if the car dealer cannot find someone to buy your purchase contract, it can cancel the purchase contract. But, the car dealer must notify you within 10 days of the date on the purchase contract. If it does not, then the purchase is final and cannot be cancelled. Every purchase contract relating to a car purchase in California that I have reviewed has included this provision in it, and our firm has seen thousands of purchase contracts.

If the dealership cancels within 10 days, you get your down payment or trade-in back. The purchase contract requires the car dealer to return to you all consideration (i.e., everything) given for the purchase. This includes your trade-in vehicle. If you gave a $2,000 down payment and a car as a trade-in, the car dealer must give you back both the $2,000 and the trade-in when you return the car you purchased.

Sometimes a car dealer may tell you that it already sold your trade-in, and will offer you the value of the trade-in as listed on the purchase contract. The language of the purchase contract does not appear to give the car dealer this option. It requires the return of the trade-in. However, if the car dealer does sell your trade-in, at the very least, you should tell the car dealer that it has to give you whatever is the highest value for your trade-in out of either (1) the value of the trade-in as listed on the purchase contract, (2) the fair market value, or (3) what the car dealer received when it sold your trade-in.

The car dealer CANNOT charge you for using the vehicle you purchased from them. For instance, it cannot charge you for the miles put on the car during the 10-day period. However, you are responsible for any physical damage to the car during the time it is in your possession.

If the car dealer exercises its right to cancel the purchase contract within 10 days, you are not required to sign a second contract to purchase that same car. Let me repeat this. A car dealer cannot force you to sign a second contract. If the car dealer cancels the purchase contract with 10 days, you are obligated to return the car, and the car dealer must give you back any down payment or trade-in that you gave with the purchase.

The car dealer cannot cancel the purchase contract after the 10-day period has expired. If a car dealer tries to do this, you should advise it that your understanding is that the car dealer is no longer entitled to cancel the purchase contract, and ask the car dealer to send you a letter explaining why it thinks it can still cancel the purchase contract.

If you continue to have problems, or have any questions, please contact the Auto Fraud Legal Center.