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Dr. Don Taylor, CFA, Bankrate.com advice columnistToo late to renege on car purchase

Dear Dr. Don,
I live in North Carolina. I signed an agreement to purchase a new car yesterday, putting the $500 down payment on my credit card, and just a couple of hours later changed my mind about the purchase. The dealer told me fine, but he was keeping my $500 down payment.

I haven't even taken possession of the car and the contract doesn't indicate the down payment was nonrefundable. The credit card company says they have an obligation to pay it, but I can dispute the charge later. What rights do I have to get my $500 down payment back?
-- Tracy Turbocharged

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Dear Tracy,
I'll have to admit leaning toward the dealer's point of view on this one. You went car shopping, bought a new car and now have buyer's remorse about the purchase. Taking a $500 hit hurts, but it sure beats the depreciation hit you would have taken if you drove the car off the lot as the proud new owner and then attempted to sell the car used.

A right of rescission in a contract gives you a cooling-off period where you can walk away from the deal. It's normal for homeowners to have this right when they use home equity loans to tap the equity in their homes, but isn't standard fare on the purchase agreement for a new car.

The dealer agreed to cancel the purchase agreement, subject to keeping the deposit you made on the car. One risk you face in disputing the credit card charge is that the dealer has a contract with you for the purchase of the car. If you have nothing but the dealer's oral agreement to rescind the contract, and that offer was predicated on the dealer being able to keep the deposit, you may find yourself back at square one, the proud owner of a new car.

The North Carolina Office of the Attorney General has an online form that you can fill out to complain about the company's sales practices, but I don't think you're going to get very far with an "I changed my mind" complaint filed with the Attorney General. In fact, a Consumer Tips guide provided by Attorney General Roy Cooper states:

A contract is binding. Unless the contract specifically says otherwise, it cannot be cancelled once you and the dealer have signed it. Make sure the contract states that you can void the agreement and get back your down payment if the dealer does not meet any part of the agreement.

Contract law varies by state, so consumer rights will vary based on applicable state law.

The FTC Guide for Consumers Fair Credit Billing describes the steps you would need to take in the dispute process under the provisions of the Fair Credit Billing Act.

If you're intent on getting your $500 back, then what you need is legal advice, not forms and guides, because you really have a twin goal of getting your $500 back and not owning the car. My guess is that you'll spend at least $500 getting that legal advice. Carry the day and you'll gain the satisfaction that the money's not going in the dealer's pocket. Lose the fight and take delivery of that new car.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "financing a home," "saving & investing" or "money."

Bankrate.com's corrections policy -- Posted: Dec. 1, 2006
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