I signed a contract for a car, can I cancel?

Are cooling-off periods (i.e., an opportunity to cancel a contract and get back your money) the law in Ontario or simply misconceptions? Before answering that question, take our quiz to test your consumer rights knowledge. 

Quiz: test your consumer rights knowledge 

If you sign a contract to join a gym that requires you to pay $50 (or more) in advance, which of the following is true: 

• You can cancel within 24 hours 

• You can cancel within 48 hours 

• You can cancel within 10 days 

• You can cancel within 20 days 

• There’s no cooling-off period; you signed a legal, binding contract 

If you sign a contract in your home to buy a hot water heater, which of the following is true: 

• You can cancel within 24 hours 

• You can cancel within 48 hours 

• You can cancel within 10 days 

• You can cancel within 20 days 

• There’s no cooling-off period; you signed a legal, binding contract 

If you sign a contract to purchase a vehicle, which of the following is true: 

• You can cancel within 24 hours 

• You can cancel within 48 hours 

• You can cancel within 10 days 

• You can cancel within 20 days 

• There’s no cooling-off period; you signed a legal, binding contract 

Answers 

The cooling-off period for most fitness club contracts is 10 days; that’s the law; and the right to cancel is provided by the Consumer Protection Act (CPA). The CPA also grants a 20-day cooling-off period for hot water heater contracts signed in your home. As for vehicle purchases, there is no cooling-off period.

“Unfortunately, the belief that there is a cooling-off period for vehicle purchases is a common misperception,” explained Tim Hines, OMVIC’s director of consumer support. “Unless there are conditions written into the contract allowing for cancellation, there’s no cooling-off period – period.”
  

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. “We find many dealers will cancel a contract and return a deposit as a gesture of goodwill.” But not all dealers may be so inclined, nor do they have to be. It’s perfectly acceptable for dealers to seek compensation for liquidated damages from the consumer. These are the costs the dealer will incur for letting the consumer out of the contract; they might include additional advertising or financial carrying costs.  

So while buying from an OMVIC-registered dealer is unquestionably the safest way for most consumers to purchase a vehicle (buying privately comes with no consumer protection), it’s still vital consumers educate themselves and learn to ask the right questions. 

7 Car-Buying Tips: 

1. Ensure the salesperson understands your needs – not being listened to? Shop somewhere else. 
2. Take a thorough test drive, not just around the block. 
3. Understand “all-in” pricing. Dealers cannot charge more than the advertised price (except to add HST & licensing). If they try, shop elsewhere and report the dealer to OMVIC. 
4. For used vehicles: ask for or purchase a history report. Consider a mechanical inspection, particularly if the vehicle is out of warranty. 
5. Get all conditions in writing (e.g., “subject to spouse’s approval” or “xxx to be repaired”). 
6. Get all disclosures in writing (e.g., “no accidents”). 
7. Carefully read the contract (and loan agreement) before signing – because remember, once signed, sales are FINAL. 

To learn more about the protections afforded to you under the Motor Vehicle Dealers Act and resources when purchasing from an OMVIC-registered dealer, visit omvic.ca. For advice and answers to all your car buying questions, reach out to OMVIC’s consumer support team at [email protected] or 1-800-943-6002. Plus, explore their free education services and webinars by emailing [email protected]. 

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