Understand when you are eligible to cancel an agreement
There is no cooling-off period or right to cancel a motor vehicle contract in Ontario once a car buyer has signed a contract to purchase or lease a vehicle, unless certain conditions are met.
That is why each purchase agreement must contain the following statement next to the car buyer’s signature:
Please review the entire contract, including all attached statements, before signing. This contract is final and binding once you have signed it unless the motor vehicle dealer has failed to comply with certain legal obligations.
You must carefully read the entire contract and any other associated agreements (for example, financing contract) and only sign it when you are certain you want to purchase the vehicle.
To avoid contract cancellation disputes you should:
There are certain situations that provide you with the legal right to a refund or contract cancellation.
If you give a dealer a deposit for the purchase of a vehicle but no contract is signed, you can request your deposit back at any time and the dealer must comply.
When conditions set out in clear terms about what the seller and buyer are obligated to do before a purchase is completed are not met. The deal can be cancelled and your deposit should be returned.
Conditions should be based on what is important to you and may include:
First-time car buyers may want to consider including a condition related to finding affordable insurance. Often, young car buyers, or car buyers who have a poor driving record, may be offered expensive insurance rates, with monthly payments that are higher than their car loan payment.
Verbal promises can be difficult to prove, so it is vital that you get all conditions in writing.
A dealer can refuse to agree to a condition. It is then up to you to decide if you want to proceed with the purchase.
The MVDA allows you to cancel a contract within 90 days of delivery of a vehicle if the dealer and contract fails to disclose, or fails to disclose in a timely way:
For used vehicles only, a margin of error is allowed to the dealer when they determine the total distance driven, or, when they cannot determine the total distance driven, but can determine the distance driven as of some past date.
The disclosure of distance made by the dealer is deemed to be accurate if it is within the lesser of five per cent or 1,000 kilometers of the correct distance required to be disclosed. This does not apply to new vehicles.
Consumers who are eligible to cancel a contract due to the failure of a dealer to make one of the required disclosures under the MVDA can send a letter to the dealership informing them of the intention to cancel the agreement. We recommend sending the letter in a manner that provides proof of delivery.
You may be entitled to request the cancellation of an agreement if you have been a victim of unfair practices. The CPA defines unfair practices as those involving false, misleading, deceptive or unconscionable representations.
Car buyers have up to one year from the date of signing a contract to request a cancellation under the CPA.
As a considerable amount of time may have lapsed before a cancellation is granted under the CPA, the courts may allow dealers to charge for usage if a contract is cancelled.
If you cancel an agreement without a legal right to do so, a dealer has four options.
While some dealers may cancel a contract and return a deposit as a gesture of goodwill, they are not obligated to do so. If you find yourself in this situation, be honest with the dealer and try to seek an amicable resolution. It may be necessary to put your request in writing and send your letter by registered mail, courier, or hand-deliver it, and obtain a receipt.
If you are trying to cancel a contract you can send a letter to the dealership provided that
Since there is no cooling-off period in Ontario, if the dealer agrees to cancel a vehicle purchase agreement, they are entitled to claim liquidated damages and retain a part, or all of your deposit.
Liquidated damages arise from the expenses a dealer may have already incurred in when selling the vehicle to you (for example, advertising, freight and administrative costs, cost for the loss of profit resulting from the cancellation).
For additional support contact our consumer support team. We will attempt to assist you with a dispute with a registered dealer however we do not have the authority to order a dealer to cancel a contract or return a deposit, only the courts have that authority.