Can you back out of buying a car after signing papers?

Quick insights

• The agreement you sign when buying a car legally binds you and the seller to the terms of the sale.
• Signing the paperwork legally finalizes the deal, and there’s usually no option to walk away from that obligation.
• The binding nature of the documents you sign means that you cannot simply change your mind and back out of the deal after signing.

One general rule of a car purchase is that your signatures on the paperwork are legally binding. Under normal circumstances, there is little opportunity to back out of the sale after signing.

Buying a car: The basics of a purchase agreement

A purchase agreement is a legal document with the terms and conditions of a vehicle sale. You typically sign one when you buy a car from a dealership, before you can drive away. The terms and conditions are important to understand because the agreement is legally binding once it is signed. Both parties must then adhere to the terms.

Can you back out of buying a car after signing the papers?

In most cases, you cannot easily change your mind and cancel a vehicle sale after signing a purchase agreement. It’s a contract that, simply put, requires the seller to transfer ownership of the vehicle and the buyer to pay for it.

Your options to back out are typically limited to specific circumstances:

• Contingent financing: If your purchase is based on securing the financing, but that falls through, the purchase agreement may be voided. You may be able to return the car and walk away from the deal.
• Dealer’s failure to deliver: If the dealer fails to deliver the vehicle as agreed, such as not providing the correct make, model or agreed-upon features, you may have grounds to cancel the purchase.
• Legal violations: If the dealership engaged in illegal practices, such as fraud or misrepresentation, that might void the contract. This could include situations where the dealer provided false information about the vehicle’s condition, history or financing terms.

Some might think a vehicle sale could be canceled based on the concept of “cooling-off periods.” These provide a time frame for a buyer to reconsider a purchase. According to the Federal Trade Commission (FTC), cooling-off periods do not apply to vehicle purchases. Once you sign the purchase agreement, you must adhere to the terms.

Are car deposits refundable?

You may be entitled to a deposit refund if the dealership fails to fulfill its obligations under the purchase agreement. But in most cases, car deposits are non-refundable. This is especially true if the down payment serves as your deposit, and the dealer promised the vehicle’s availability.

Some states have specific consumer protection laws that regulate the refundability of car deposits, such as New York and California. Ultimately, whether a car deposit is refundable depends on the terms set by the dealership during the sale. Such terms that would make a deposit refundable should be stated clearly in the purchase agreement. To avoid losing your deposit, ask for a written agreement outlining the terms.

Can you return a car after purchase?

Dealerships may offer a return policy. However, be prepared for this not to be an option at every dealership. When available, return policies are typically limited to a specific time frame, such as 24 to 72 hours. Additional conditions might also apply, such as a mileage limit or approved inspection upon return.

As mentioned, a dealership may fail to meet certain conditions of the purchase agreement, such as delivering the wrong vehicle. In these cases, you might have legal grounds to return the vehicle.

Lemon laws

Some states have lemon laws that allow buyers to return or replace a vehicle if it has a significant defect that the dealership cannot repair after a reasonable number of attempts. These laws vary by state and usually apply to new cars rather than used vehicles.

In conclusion

Buyer’s remorse is a difficult feeling, but once the paperwork is signed, your ability to back out of a car purchase is very limited. Returning a car after the purchase is generally not an option, as most dealerships do not have a return policy once the sale is finalized. If you’re considering returning a car, first contact the dealership to inquire about any return policies they may have.

Purchasing a vehicle is a significant financial commitment. It’s important to review documents thoroughly, ask questions and ensure you’re completely satisfied with the terms of a sale before finalizing them.