Can I cancel a car deal after signing the finance & other paperwork?

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kingr
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Can I cancel a car deal after signing the finance & other paperwork?

Post by kingr »

Are you entitled to return a car you’ve just bought on a financed deal? That’s an interesting question, and one that has three answers - yes, no, and don’t be bullied!

In a nutshell, the short answer is yes, if the car legitimately falls short of what you were told. In other words, driving out of a dealership, or a private yard for that matter (since nowadays private car finance is available), you could have been lied to. If you have been misled into believing certain attributes of the car or if it is simply mechanically unsound in spite of your attempts to inspect the vehicle, either immediately or, officially within six months, you are entitled to return the car. So far so good, but it can be a lot more complex than that in reality.

To be clear, unless an entity approached you with a direct marketing offer - a phone call or SMS, or an email notification in your inbox - there is no “seven day cooling off period” as typically applies to more direct sales. Rather, the law allows you six months to return the car on legitimate grounds. “I don’t like the colour anymore,” for the record, is not a legitimate reason! Neither are “The tyres are wearing too fast!” or “It’s not as fast as a BMW!” Rather, “The wheel came off!” or “It’s starting to jump out of fourth gear!” are legitimate reasons.

What can you expect if you want to return a financed car?
  • You have the fundamental right to return goods that were misrepresented at the time of purchase, and this includes mechanical failure that causes a loss of confidence on your part in the car. Although perhaps no one’s fault (i.e. the seller might honestly not have known about the potential for failure) the fact remains that you’re entitled to six months implied warranty from the seller under the CPA.
  • You have, however, signed off on the fact that you inspected the car and are ready to take possession of it, happily, if you read the financing fine print. Also, the dealership or even private advertiser can claim that they incurred expenses in selling the car, expenses you are now liable for. This is not legally sound - you are not liable for any expenses when you have experienced genuine misrepresentation or even blameless mechanical failure as a consumer. Practically, however, most of us tolerate a few legitimate expenses being deducted from any refund by the advertiser.
  • That said, you need to know that dealerships will take the car back - and all sellers are obliged to if your complaints are legitimate and covered under the CPA, period. Most financiers will look to the dealership to effect needed remedies in the case of a return, and you’ll likely be told all about “contract costs” and how it’s “illegal” for you to cancel finance. Unfortunately, this is standard fare, no matter how legitimate the dealership. It’s also a lie - if you were burnt in a car deal, the financer’s costs and the seller’s costs are not your problem, says the law. Expect shameless intimidation from the corporate parties, and simply know and repeat that it’s all rubbish.To recap, yes you’re allowed by law to return a financed car within a maximum of six months for legitimate reasons - although sooner is far better, for you - and no, you’re not legally liable for any expenses incurred by other parties.
  • With that said, you need to be absolutely sure of the points that caused the deal to sour - incorrect engine capacity given, false assertions about performance, mechanical faults that have not been addressed to the manufacturer’s specification - so that your complaints are fundamentally supported. There are other aspects to consider when preparing for a return too.
Difficulties you might experience when returning a financed car
  • You might have accepted that the dealership needs a fair opportunity to fix what is broken
    You might have signed acceptance giving the seller the right to first, repair the car, secondly perhaps to replace it and, lastly, to issue a refund. Although even reaching for the first option will still typically see you blue in the face just to get an acknowledgement of liability, keep at it! With a car, you might have technically signed away your right to insist on an immediate refund, and be obliged to allow the dealership or even private seller to effect repairs as remedy, provided they meet manufacturer’s standards.
    • The refund process will be slow
      With that said, a consumer has the right to insist on a full refund, no matter what you might have unknowingly signed away, so if it goes to court and your complaint is legitimate, you’ll get the refund. A bit of quick maths normally demonstrates that it’s not worthwhile for any party to enter litigation, however, hence a reasonable tolerance for the advertiser’s expenses or route to remedy is more typical. There’s a fine line between being reasonable and being fobbed off by an uncaring supplier, so have definite timelines for performance and make sure you stick to them by following up when you say you will.
    • There are “third party” implications
      Don’t be fobbed off when the seller insists they were selling the car on behalf of a “third party.” Even dealerships can claim that the car wasn’t officially part of their “stock,” but this is not your problem. That fact - and any implied limitation of returns - should have been sung to you accompanied by a mariachi band at the time of the sale to leave no ambiguity. Bringing it up as a get-out-of-jail-free card when you return a financed vehicle is disingenuous and unlawful. You have the right to target anyone in a supply chain that supplied you goods, but keep it to the people who handed you the keys.]
    • Flat-out refusal
      In the very rare case that a seller refuses to refund or otherwise cancel the sale, know that the proof of unsuitability, unreliability or mechanical unsoundness of the car must be able to be demonstrated by you. Only in rare cases in South Africa will a dealership ultimately refuse to take a car back, as the broad consumer protection legislation as well as potentially bad press is stacked against them. That said, it is equally true that only in rare cases is the process easy or even pleasant. You might face all sorts of scoffing and even outright lies - “No one can return a financed car!” - and so on, but realise that it’s a tough arena where the seller will fight tooth and nail, yet the law can ultimately not be broken, by dealerships or anyone else. Know your fundamental rights as a consumer, and stick to them. The law is on your side, as long as your complaint is legitimate.
    • Deciding you don’t accept defects after all
      Importantly, note that if the seller made plain any defects or other potential issues verbally or in writing, and you accepted these and took the car, you have essentially waived your rights to return it on that basis. If you took the car fully informed of defects, missing bits or pending repairs, you waived your right to change your mind later.
    • Subsequent costs, allegations of “loss of profit” and other spilt milk
      Be aware that in cases where you insist on a full refund, a seller might be entitled under law to claim the difference between the price you paid and the price they subsequently attain in reselling the car, from you! Here you really enter the legal realm and, again, most dealerships and even private sellers have neither the time nor political will to pursue things to this extent. Read the fine print three times and spend as many hours as you need on the paperwork to understand all implications before driving away. If you take especially a private seller to court, it’s going to cost you. Dealerships can also typically access a far greater legal fund than a private individual. Suing clients for a “loss of profit” is typically nonsensical, however, as more is lost in legal fees and the relationship dies forever more.
    Typical legitimate returns of a financed car
    • Lack of disclosure. A seller is obliged to disclose fully all relevant issues on a sale car as well as all registration and other identifying details. If there is legitimate wear and tear on the vehicle by you when you return it, the seller is allowed to offset those costs. Not based on the fact that you drove off the premises under false pretences, mind you, but a paint scrape or missed service or worn tyres or other demonstrable wear and tear is legally accommodated on their side. Hence the recommendation that returns are affected as soon after the sale as possible, if desired.
    • Mechanical failure or demonstrably false indications of performance anticipated do constitute solid grounds for a return. The word “reasonable” populates the CP Act for good reason, and any blatant lying about performance, non-disclosure of pre-existing conditions and even “blameless” post-sale failure is grounds for a return, within six months.
    Common questions on returning a financed car

    “Can I return a car if it just leaves me just feeling dissatisfied after a while of driving it?” No, although normally only with a dealership, and normally only if you refinance something else, they’ll accommodate you in the name of good business. Most dealers want a good reputation and they want you to return one day. It’s good business - no matter how much of a pain it is for them at the time - to accommodate you, retract the deal and sell you something else. If you’re not financing something else, however, officially you don’t have the right to return a car with nothing wrong that you really just didn’t do your homework on, so don’t expect an easy ride if you’re not taking something else from the same dealership. There needs to be legitimate, other motivation besides an overall dissatisfaction with a car on your part.

    “Am I really liable for anything if I return a dud car?” No. You’re not liable for any expenses. Indeed, many times a decent dealership will refund you for expenses incurred in returning the car. South Africa is diverse, so expect a full range of people in the business arena too. Any reputable dealership will accommodate you, but many more will fight tooth and nail to maintain the deal, even implying that “you can’t cancel finance” and so on. Be sure of the legitimacy of your complaint, and the law is on your side all the way. Don’t be bullied!

    In a nutshell? Be reasonable! If your issue is legitimate, you’ll find that South African consumer law is good! Ultimately, you have full rights within six months to legitimately rescind a financed deal. With one small proviso - read the fine print! The Act isn’t fond of people who claim they couldn’t educate themselves about the stipulations contained therein, particularly when vehicles are concerned. The act presumes certain adult responsibilities and a sufficiently sophisticated sense of commerce from car buyers, at least. Also, ask exact questions, like “Can I return this car if it starts smoking in month three?” even if you’re ecstatically happy at the time.

    When facing the return of a financed car, just make sure that your issues are legitimate and that you’ve steeled your nerves. Leave emotion out of it and repeat the facts until you have resolution. Ideally, get a car valuation and even a car history check when buying from a private seller, while adhering to the approved vehicle inspection protocols stipulated by financers. Ask questions like a two year-old, and all should be well!

    Talking car finance is best done upfront!

    Make no mistake, the Consumer Protection Act is not a license to return a car you bought willy-nilly. There is also the Motor Industry Ombudsman that adjudicates on these matters, and that office currently handles around 7000 complaints a year relating to sour deals. The ombud’s office also broadly resolves issues around what can be deemed a “reasonable outcome” for all parties.

    Returning a financed car should be a very infrequent, last option. Far, far better is to pay for a multipoint check on the car before signing on the dotted line, and you can do this for both dealership and private sales. The majority of dealership sales are amenable to a return and repair or return and replace, whereas private sales are also obliged to take the car back and issue a full refund if you legitimately so insist. This legitimacy is outlined in the Act.

    And - one final point - most “failures” of a bought car need to be able to be traced to a (known or unknown) fault extant at the time of the sale, at least if you expect a full refund.

    Ask as many stupid questions as you like! Read the fine print 50 times and get the multipoint check done, if that’s what it takes to be clear. A car is not a casual purchase, so rather make sure you understand all implications before leaving the yard. If you really have an issue or issues with a financed car, make sure you can accurately describe the issue, make sure you’re still within the six months allowed by law, and go get resolution with the law on your side!
Kurt #3337

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