Tips on Buying Cars: cancelling a used car contract before taking ownership or completing payment, toyota camry 2007, cooling off periods

Question
QUESTION: Hello Jeremy,

I have a question regarding the topic of cancelling a use car contract:


I just signed a contract over the weekend (Saturday afternoon) to purchase a used car (Toyota Camry 2007) from a local dealer. I put down a deposit of $500, and was set on completing the payment for the car (cash) and taking ownership on Monday night (Sept. 29 2008). When I ran a "CarFax" report later on Saturday evening, I realized that the car was a "rental" which was acquired at an auction. This threw red flags in my mind, and I would like to back out of this deal (I know, I should have ran the CarFax report before signing anything, you are right!!).


What are my options here? Is the contract legally binding that the dealer can force me to take ownership, or do I still have some life since I have not completed the payment for the car and drove off the lot with it? Can I just tell the dealer "I am not interested anymore and that I have changed my mind"? I know there are no "cooling-off" periods for used cars, but I want to know my options!



If you can get back to me ASAP (I know you must have many like these), then I would greatly appreciate it.



Thanks so much,



Sam.

ANSWER: Sam,

First, since you have not taken possession of the vehicle, now lets define possession.  If you drove that vehicle off the lot AFTER you signed papers, even just around the corner, then you took possession.  But if you have not taken possession of the vehicle, then you can back out of the contract.  Depending on what papers the dealership had you sign, you may not get your $500 down payment back, but you should.  

You can tell the dealer anything you would like, the simple fact remains, if you have not taken possession of the vehicle, then you do not own it.

Hope this helps.

Thanks - Jb

---------- FOLLOW-UP ----------

QUESTION: Thanks JB for your reply. A follow-up if I may!

I have not driven it of the lot AFTER I signed the contract, as you had asked. I am not worried about the $500, but I am worried about the $20k :-)

I am going to make it more complicated. Let's say I want to get inspected at a mechanic before completing the payment, then I have to drive it off the lot. Does that technically mean that I own the car? I do not think so, since I have not completed the payment, but I would like to know what you think?

As well, do you know for sure if a rental car is in an accident, it might not go reported in CarFax since rental companies are self-insured and can fix their cars in-house?

Thanks again for your help!

Answer
Sam,

Buying a rental car is not a bad thing....yes people tend to not take care of rental vehicles as much as they do their personal cars, but that is something you can tell by looking at the vehicle.  I would not worry as much about it.  Carfax is unreliable anyway, so I would not rely on cafax to tell you if any vehicle has been in an accident.  

What you need to do to get the car checked out by your mechanic is have them put on whats called a due bill, that you are taking the vehicle to have your mechanic look at it, and if you choose that you can back out of the contract.  

As for the $20K.  Sam, you haven't given it to them.  If you haven't given it to them, then they can't keep it, or get it.  Yes, they could take you to court, but again, you haven't taken delivery of that vehicle, so they can't take you to court unless they want to waist their money, and I can assure you that they do not.

Simply tell them that you want to have the vehicle checked out by your mechanic and make them right it on a due bill stating that if your mechanic sees anything wrong with the vehicle that it voids the sale.

Hope this helps.

Thanks - Jb