Cooling-Off Period: What It Means and When It Applies
OMVIC, ONTARIO’S VEHICLE SALES REGULATOR SETS THE RECORD STRAIGHT
Signed up for hot yoga or a spinning class but decided you prefer walks in the park? You might be in luck. In Ontario consumers can legally cancel a gym or fitness club contract within 10 days — no questions asked. The same is true if a consumer signs a contract with a door-to-door salesperson; and consumers who sign-up for a new water heater now have a mandatory 20-day cooling-off period. But do all purchases allow a specified time for the consumer to change their mind? What about vehicle purchases?
SO HERE’S A QUESTION
When you sign a contract to buy a car from a dealer, there is:
A) A 24 hour cooling-off period
B) A 48 hour cooling-off period
C) A 10 day cooling-off period
D) No cooling-off period
A COMMON MISCONCEPTION OMVIC, Ontario’s vehicle sales regulator conducted a survey asking Ontarians this same question: only 16.7% answered correctly – D – there is NO cooling-off period when buying a car; the other 83.3% were either misinformed or uninformed. “It’s a common misconception and it causes a lot of headaches,” explains Tim Hines, Manager of the Complaints & Inquiries Team for OMVIC. According to Hines, disputes involving contract cancellation account for more than 20% of all consumer enquiries his department receives. “Sometimes it’s simply buyer’s remorse, but often the consumer wants to back out after doing some budget calculations and discovers just how costly insurance will be for the model they’ve bought. Unfortunately, it may be very difficult to cancel at that point.”
So what can a consumer do if they sign a purchase agreement and then want to back out?
“Be honest with the dealer,” suggests Hines. “Perhaps transferring your deposit to a more suitable vehicle will solve the problem. Dealers want your business and if you intend to purchase a vehicle, they’re usually willing to work with you to make that happen.”
And while some dealers may cancel a contract and return a deposit as a gesture of good-will, they’re not obligated to do so. It’s perfectly acceptable for dealers to seek reimbursement for liquidated damages from the consumer; these are the reasonable costs the dealer will incur for letting the consumer out of the contract.
TIPS BEFORE SIGNING A CONTRACT
An educated consumer is a protected consumer. Doing your research before signing a contract is vital and includes:
- Determining your budget — include ALL expenses (not just the car payment)
- Researching the vehicle
- Reliability: repairs can be expensive!
- Financing: compare rates and terms — don’t make your decision based solely on a low monthly payment
- Depreciation: how well does the model retain its value
- Add-ons: Research additional products, services and warranties before signing
ALL SALES FINAL
With no cooling-off period for car sales, consumers shouldn’t sign a purchase contract unless they’re absolutely certain they want to complete the transaction. Once signed, it’s a legally binding contract. There’s no coolingoff period — period
For more information about your car-buying rights visit www.omvic.ca. To contact OMVIC’s Complaints & Inquiries Team call 1-800-943-6002 x5105 or email email@example.com.