What to Do if a Car Dealer Tries to Return your Trade-In
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When you made your car purchase and drove off, it was a special day. You bought the make and model you wanted, in your preferred color, equipped with unique options, along with a new auto insurance policy.
Trading in your old car provided you with a nice amount of money as a down payment, which lowered your loan amount and monthly payments. This made an expensive purchase more manageable, letting you get behind the wheel of just the vehicle you'd been after.
But now, not long after completing the transaction, the auto dealer wants to return your trade-in and for you to return your new car. Can a dealer back out of a deal? What happens when a car dealer breaks a sales contract?
Let's look at the details of when a dealer tries to return your trade-in.
The basics of trading in a car
When you trade in your old car, you receive funds to put toward your next one in a quick and simple transaction.
By simply visiting the reseller of your choice and accepting their trade-in offer, you can collect valuable cash to use as a down payment. Usually, trade-in values are less than those when selling to a private party, but you save valuable time and can drive off in your new vehicle the same day.
All you have to do is decide on your preferred reseller, agree to their offer, and then use the money as a down payment on your new-to-you car. Though trade-in prices are typically lower than those paid by a private party, the process is simple and can take as little as a few hours.
On the other hand, it can be a laborious, prolonged process when you go with a private sale. You have to take detailed photos of your vehicle from multiple angles, post an advertisement, and wait for the phone to ring. Then you have to answer questions from potential buyers before agreeing on a purchase price and taking care of necessary documentation like transferring the title and signing a bill of sale.
It could take many weeks or months before confirming a buyer and pocketing money for your next car.
Trading in can also reduce the sales tax on your vehicle purchase. Many states only levy sales tax on the amount left when you subtract the trade-in value from the new car price. This significant perk can save you many thousands of dollars, allowing you to keep extra funds in your bank account for essential expenses like car insurance and routine maintenance.
When it's time for a new-to-you vehicle, you'll probably want to sell or trade-in your old one. But selling to a private party can be a hassle. And how can you be sure you receive a fair trade-in offer? But when selling your car to Shift, there's no need to worry about any of that. All you'll have to do is enter the make, model, year, and mileage on Shift's easy-to-use free estimate calculator, and you'll instantly receive a purchase offer that's valid for seven days. You can get a fair offer, better than at the dealership, driven by powerful machine learning algorithms and tons of data. And with Shift, there’s no need to spend the extra time waxing and washing the car. A little dirt won’t affect the quote, and we fully detail the cars ourselves anyway before listing them for sale.
Can a car dealer back out of a deal?
In short, yes, a dealer can back out of a contract but only during specific time frames and scenarios. Also, their opportunity to do so is brief, and you're protected by laws should they attempt to take advantage of you.
When you finance through a dealer, they look for a bank or lender to buy your car loan. Typically, this transaction goes through, and you continue driving your new-to-you vehicle and making monthly payments.
But if the dealer struggles to find a buyer for your financing contract, they have the right to cancel your car sale within 10 days. However, they must notify you within that specified period, or the agreement is finalized, with no option to back out.
Owning a vehicle comes with many associated expenses, like fuel, insurance, and maintenance. Saving money where you can on auto-related costs helps keep extra funds in your bank account. One way to do that is to secure a good auto loan. Shift works with a network of trusted lenders who compete for your business, so you get the best deal on financing. Applying for financing with Shift is quick and simple, with no cost or obligation. Most applicants receive an offer within minutes instead of days. Financing with Shift is so convenient that nine out of 10 customers choose us when they need an auto loan.
What happens when a car dealership breaks a contract?
Although a dealer can cancel your contract if you finance with them, you have rights and protections should they do so.
If the dealer backs out of your deal within the specified 10-day window, they're obligated to return your trade-in or down payment. If you made a trade-in and a down payment simultaneously, you're entitled to receive both.
However, there are a few things to watch out for in this situation.
A dealer isn't allowed to charge you for using your new vehicle during the 10-day window. You carry no responsibility to reimburse them no matter how many miles you rack up on the odometer. But you are liable for any damage that might occur while the car is in your possession.
If the dealer says they've already sold your used car trade-in, make sure you receive fair compensation. Reasonable sums can include the trade-in value listed on your contract, the fair market value of your car, or what the dealer sold it for.
But if the dealer attempts to cancel your agreement outside of the mandated 10-day period, you're free and clear. If they try to do so, you can bring the allowable time frame to their attention and continue driving your new-to-you car.
2016 Hyundai Sonata (from $14,500)
Can a dealership cancel a contract in summary
Though dealers can cancel contracts in certain situations, their opportunity to do so is brief, and you receive full reimbursement for your trade-in or down payment.
Knowing your rights in this scenario keeps you financially protected and ensures you aren't taken advantage of.
Though car buying on the used market can save you thousands, where can you find one that stands the test of time? At Shift, certified mechanics perform extensive 150-point inspections on every car sold, and you get a free Carfax report for the ultimate in transparency. You can buy any of Shift's cars directly online from the comfort of your home, know it has no hidden issues (from our 150-point inspection) and get a fair, up-front price. Whether you want a Honda, BMW, or Toyota, Shift has what you need. And with Shift's best-in-industry service contracts, you know your vehicle's good to go, mile after mile.
2020 Ford Escape (from $27,200)
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All prices are based on vehicle availability and pricing as of
April 15, 2022
Pricing shown is not guaranteed and does not include taxes or other product fees.