Yesterday, we discussed how dealerships are allowed to cancel your car contract, but only if they do so within 10 days of the date on the purchase contract. If the dealership cancels within 10 days, you get your down payment or trade-in back. The purchase contract requires the car dealer to return everything that was given for the purchase. This includes your trade-in vehicle. If you gave a $2,000 down payment and a car as a trade-in, the car dealer must give you back both the $2,000 and the trade-in when you return the car you purchased.

Sometimes a car dealer may tell you that it already sold your trade-in, and will offer you the value of the trade-in as listed on the purchase contract. The language of the purchase contract does not appear to give the car dealer this option. It requires the return of the trade-in. However, if the car dealer does sell your trade-in, at the very least, you should tell the car dealer that it has to give you whatever is the highest value for your trade-in out of either:

• The value of the trade-in as listed on the purchase contract
• The fair market value
• What the car dealer received when it sold your trade-in

Tomorrow we will discuss what car dealers CANNOT do with your car contract. If you believe that a dealership violated California lemon law in your last car purchase, contact our office today for a free evaluation. Our California lemon law lawyers have successfully litigated cases of auto dealership fraud cases for more than two decades.

Rosner, Barry & Babbitt, LLP — California lemon law attorneys

Our law firm helps many consumers looking to get out of bad car contracts, but it is important for everybody to know that car dealers can also cancel a car contract. If you buy a car that is financed through the dealership, the dealer is allowed to cancel the contract. However, it can only cancel the contract if it notifies you within 10 days of the date on the purchase contract. If you look at the back of your purchase contract, you will find the box that says “Seller’s Right to Cancel” at the bottom of the second column.

The “Seller’s Right to Cancel” box advises you that after you sign the purchase contract and leave with the car, the dealership is going to find a finance company or bank to buy your contract. This language gives a car dealer the opportunity to find someone to buy your purchase contract. While most of the time this is not a problem, the car dealer can cancel the purchase contract if it cannot find someone to buy your purchase contract. However, the car dealer must notify you within 10 days of the date on the purchase contract. If it does not, then the purchase is final and cannot be cancelled. The dealership is then the finance company for the contract and you can make your payments to it.  Every purchase contract relating to a car purchase in California that we have reviewed has included this provision in it, and our firm has seen thousands of purchase contracts.

Tomorrow we will discuss what to do if the dealer does cancel within the 10 days. If you believe that a dealership violated California lemon law in your last car purchase, contact our office today for a free evaluation. Our California lemon law lawyers have successfully litigated cases of auto dealership fraud cases for more than two decades.

Rosner, Barry & Babbitt, LLP — California lemon law attorneys