May 14, 2017 | By Paul Samakow | Paul samakow
We have all made purchases that, within a very short period following, we regretted. Our gut was aching badly. Does “my spouse is going to kill me” sound familiar? Was it “too much car” for your needs or was the payment too high?
For some reason, the urban legend that “any contract can be cancelled for any reason within three days” lives on.
Despite common belief, you cannot return the lamp you bought at the garage sale, you cannot return the used lawnmower you bought on Craigslist, and you cannot cancel the steak you ordered at the restaurant when it arrives when nothing was wrong with it.
There are consumer protection laws that allow for the cancellation of transactions for up to three days after the transaction is completed. There is much confusion however, and misunderstanding, about when a consumer has a right to cancel, or rescind, and when not.
The law applies to very few purchases. Most people have an erroneous understanding of what transactions are covered by “the right of rescission.”
Rescission laws were passed in the 1970’s as a response to commonly employed high-pressure sales tactics. The best example was the door-to-door encyclopedia salesman who would come to your house and explain why you needed to buy World Book or the other popular tome titled Encyclopedia Britannica. The sales guy would come in, and as many experienced decades ago, would not leave until the homeowner agreed to make the purchase. (No-one said I’ll wait for the Internet to find out stuff).
Remember the episode of the television show Friends where Joey bought only the “V” volume of the encyclopedia set from the salesman who was in his home trying to sell him the entire set?
Pressure sales tactics resulted in laws giving consumers a “cooling off” period to cancel certain transactions and get their money back.
The Federal Trade Commission’s Cooling-Off Rule gives consumers a 3-day right to cancel a sale made in their home, workplace or dormitory, or at a seller’s temporary location (such as a hotel room, convention center, fairground or restaurant). Even then, certain types of sales cannot be cancelled, even if they take place in places normally covered by this Rule. A few of these include transactions under $25; sales under $130 made at temporary locations; and sales made entirely online, or by mail or telephone.
The cooling off period is particularly important for the elderly, who sometimes enter into unfavorable deals with high-pressure salespeople.
When a consumer borrows money to purchase a home, there is no right to cancel the lending agreement. On the other hand, when money is borrowed to refinance a home, or “cash out” refinances, or for “home equity” loans or “credit lines,” there is a three-day period to cancel the loan. In fact, because of this law, the borrowed funds are not delivered until the three-day period passes.
Gyms, Health Spas, Health-Clubs, Weight-Loss Centers, Self-Defense Schools
Some states regulate these facilities whose salespeople make great promises. “Nobody will bother you and you will lose half your body weight when you eat our food, trust our counselor, and work-out only three times per week with our Master Trainer.”
“Remorse laws” where they exist allow for cancellation of the contract if certain conditions apply. Rule number one, regardless of any law, is to use common sense, and make sure you read the contract, paying particular attention to the “term” and the “cancellation” provisions. One month’s written notice should be the way to cancel. Pay only monthly, regardless of the length of the contract. See the tips below for buying a car and apply them to these facility memberships.
Cars, Planes and Trains, Lions Tigers and Bears
Okay, only cars. In a word, after you buy a car, you CANNOT return it or change your mind, unless there is fraud, or unless the car is a lemon. There is no cooling off period or right to rescind for car purchases.
Fraud is often hard to prove in a car purchase situation. Most car dealers’ contracts have a clause that says something like “the agreement between buyer and seller is entirely based on the paperwork signed by both parties,” or, “this contract represents the entirety of the agreement and no verbal promises or representations will be enforceable if not reduced to writing and signed by both parties.”
Meaning: the car salesperson can say anything and make any promise, such as “we don’t charge for that.” When the contract shows they do charge for that, guess which one wins and has the force of law? Right – the written contract controls.
A “lemon” is defined differently in different states. Generally, you must give the dealer a certain minimum number of attempts to repair the problem before you can invoke lemon laws to return the car and get a refund.
Herewith (a legal term meaning “okay, here we go”) are some tips for buying a car.
Read the entire contract before signing it and ask questions. If something was said is not in the contract or different than what was said, insist it be included and correct.
Get your auto loan at a bank before going to the dealership. When you get to the dealership, your conversation will be about the price of the car, not the monthly payment, interest rate, discount, or rebate. All you have to do is negotiate on the price of the car.
Do not trade in your old car at the dealer. The dealer will always give you a good price on your trade-in and make up for it on some other aspect of the car you are buying. Sell your car on Craigslist, at CarMax, or someplace else. You will almost be guaranteed to get more.
Negotiate on the “out of the door” price. Do not negotiate on plus or minus the MSRP, or dealer invoice. What is the final price number? Insist on only this conversation.
Do you really want a good price? You must comparison shop. Yes, it is much more time consuming.
Give yourself time when buying a car, and be ready to walk away. This means do not go to a dealership to buy a car if you are stressed for time, want to get home to see the game, before you are moving into a new house, if your current car just died or after a long day’s work. Also, eat a nice meal before going to a dealership. If you are hungry you will make bad decisions.
Once you have agreed to a price, know that the dealer is going to try to get you to use their financing instead of the bank, purchase add-ons, such as an extended warranty, undercoating, or some type of anti-theft device. All of these will be overpriced, and all of them can be purchased later. Say “no” to all of these and make out your check for only the “out of the door” price. You can get all of the add-ons later.
Some states actually have laws (regret laws) that allow consumers to back out of the purchase of the extended warranty purchase part of the deal.
How much is the doggie in the window?