Can a Buyer Back Out After Signing Papers for an Automobile?

Some car buyers are under the impression that federal "cooling off rules" allow them to cancel the purchase of a car within a fixed period of time, usually three days. This is totally incorrect. While the Federal Trade Commission does have cooling off rules, they apply almost exclusively to sales by door-to-door solicitors. Car sales definitely are not covered.

However, in some states it is possible to purchase a cancellation option in your contract for a car. You pay a bit extra for the car, and in exchange the dealer agrees to let you cancel the contract within a fixed period of time. In California, dealers are required to explicitly offer customers who purchase used cars for less than $40,000 a two day cancellation policy. The cost of these policies varies from around $75 to $250, depending on the price of the car.

If you knew what you were getting into when you bought the car, it's nearly impossible to cancel the contract. If you've got good evidence the dealer or salesman committed fraud in the course of the sale, however, you can get the deal nullified. In Florida, for example, if you uncover evidence the dealer rolled back the odometer on a used car to make the mileage appear lower, you can report the crime to police and sue to get your money back. Most states have similar laws dealing specifically with auto sales, and those that don't still have general protections against fraud.

If the dealer hasn't committed fraud, your best bet at getting out of a purchase agreement is your state's lemon law. Lemon laws give customers the opportunity to return recently purchased new cars that show a pattern of serious mechanical problems. Rules vary by state to state, but in general if your new car keeps breaking down despite the manufacturer's attempts to repair it, you can return it for a full refund. You'll need to keep receipts and other documentation showing the pattern of mechanical failures to prove the car is a lemon, though.