Can You Return a Car?

FT Contributor  | 

Few things in life rival the feeling of driving off the car lot with a brand new set of wheels. But once the new-car-smell-induced intoxication wears off, you might wonder if you made the right decision to buy a car.

Thanks to public transportation you don’t always need to own a vehicle, and when you’re trying to reduce your impact on the environment, the idea of driving everywhere and adding to air pollution feels counterproductive. And even if you live in a place where a car is necessary, does it really make sense to spend that much money every month on it, when there are more affordable options?

Buyer’s remorse after purchasing a new car can set in for any number of reasons and cause you to second-guess your decision. Unfortunately, once you drive your new car off the lot, returning it isn’t typically an option. That doesn’t mean you’re stuck with an expensive vehicle you no longer want. While you might not get lucky and convince the dealer to take the car back, there are ways to reduce your payments or eliminate them altogether.

Exceptions to Returning a Car

When you purchase a car from a dealer, you typically cannot return it. Once you sign the sales contract, the car is yours, and the dealer has no obligation to take it back if you change your mind. In fact, the laws that allow consumers a “cooling off” period to reconsider purchases and return them specifically don’t apply to vehicles.

That doesn’t always mean that a dealer won’t take the car back at all, though. Some dealerships will work with customers who want to return cars in the interest of protecting the customer relationship and their reputation. They refer to this practice as “unwinding the deal,” and it can be complicated, but it is possible to do. The dealer may also take a car back in exchange for a different, less expensive car. It all depends on the individual dealership’s policies and their willingness to work with you — it’s very possible that they won’t accept the return at all.

That being said, there are some circumstances when dealers will allow customers to return a purchase.

Dealer Return Policies

Some car dealerships do have written return policies permitting customers to return vehicles if they meet certain conditions. These conditions might put a time limit on the return, or only allow a certain amount of mileage. For instance, CarMax allows returns on used vehicles within seven days of purchase, and will give you your money back. Other online car marketplaces also allow returns within a certain timeframe. Although it’s unlikely that a new car dealer will offer the same terms, ask about the policy before making the purchase so you know what you’re getting into.

Rip Off

Sometimes, salespeople are less than honest and forthcoming in their quest to sell vehicles, and you may end up becoming a victim of price gouging, fraud, or other rip-offs. If you suspect that the dealer made a fraudulent deal or that you made the deal under false pretenses, you could have a case to return the car. Keep in mind, though, you need to have proof you were ripped off, and it can be challenging to make your case if you were the one who signed the sales contract. Returns under these circumstances are more common when you’re helping someone else, such as a young college student or an elderly person who was taken advantage of by the dealership.

Lemon Laws

When you purchase a vehicle that has mechanical issues, it may qualify to be returned under your state’s lemon laws. Lemon laws are designed to protect consumers from faulty vehicles that can’t be used or that are unsafe. If you purchase a vehicle from a dealership, they are typically allowed a certain number of attempts to fix the problem before the vehicle is deemed a lemon and can be returned.

Although lemon laws usually apply to new cars, they may also apply to used vehicles sold with a warranty or as “certified” used cars. They do not apply to vehicles that are sold “as-is,” which may have known problems.

Alternatives To Returning a Car

If you have buyer’s remorse about a vehicle, and returning it isn’t an option, you do have alternatives.

Sell Your Car

In some cases, selling your car may be more beneficial than returning it. Although selling the vehicle when you still owe money on the loan can be tricky, it is possible. Sell the car privately rather than trading it in, as you’ll get more for it than you would from the dealer. However, keep in mind it’s unlikely you’ll get as much as you paid for the vehicle when you sell it, and you could end up still owing the bank money for the loan.

Refinance Your Loan

If you realize that the monthly payments on your new car are too high for your budget, refinancing your car loan may help reduce the benefits and can be more beneficial than returning your car. If you financed the purchase through the dealership, for instance, you may be able to get a more favorable interest rate from your credit union or bank, which will significantly reduce your payments.

You might also be able to extend the term of your loan. You’ll pay less each month, but you’ll be paying off the car longer and will pay more interest over the life of the loan. Still, if your car loan doesn’t have a competitive interest rate, refinancing can be a smart move.

Have Your Car Voluntarily Repossessed

As a last resort, you can have your vehicle voluntarily repossessed, which basically means you return the vehicle to the dealership because you can no longer make the payments. The dealership will then sell the vehicle to recoup as much of the remaining balance on the loan as possible, and you’ll be on the hook for whatever amount is left.

This option isn’t ideal, as it will show up as a repossession on your credit report alongside the remaining balance of the loan. If there is a positive, it’s that a voluntary surrender of the vehicle is slightly less detrimental than a traditional repossession, but it’s still harmful to your credit. Selling the car outright and paying off the loan is a much better option.

Car Buying Tips

The best way to avoid buyer’s remorse after purchasing a vehicle is to do your homework ahead of time and select the right car at the right price.

Calculate a Fair Price

Before shopping, do your homework to determine which car you want, and what you should expect to pay. Use sources like Edmunds or Kelly Blue Book, manufacturer websites, and vehicle marketplace listings to get an idea of average prices and what’s considered reasonable. Compare prices from different dealers in your area as well, and don’t be afraid to negotiate to get a lower price.

Set a Budget

The best way to avoid getting in over your head and not being able to afford your car payments is to set — and stick to — a budget. When calculating how much you can afford, don’t forget to include taxes, fees, insurance, and interest costs, which will drive up the cost of a car considerably. Weigh the pros and cons of buying new or used.

For example, a new car might require less maintenance, but the taxes and insurance will cost more than on a used car. Once you know what you can afford, don’t waver from that budget. An extra $75 or $100 a month might not sound like much when you’re signing the contract, but it might make your payments unmanageable in reality.

Prepare Financing in Advance

Before heading to the car dealership, secure financing on your own. This way, you aren’t at the mercy of the dealer’s financing department and can potentially negotiate a better deal. Visit your credit union or bank ahead of time and get pre-approved for a car loan, and commit to saving money for a down payment before you start shopping. The more you can put down toward the vehicle at the time of purchase, the less you’ll need to borrow, and the lower your payments will be.

Avoid Common Dealer Tricks

Although many car dealerships are honest and upfront, not all are, so it’s important to be aware of common tricks they use. Some things to watch for include:

  • Offers that are too good to be true: Some dealers offer exceptionally low monthly payments, down payments, or guaranteed financing to get you in the door, but these offers may not be what they seem. Read the fine print; a low payment may be based on 72 month financing, for instance, meaning you’ll be making payments for six years, or the deal may require a significant down payment.
  • Prices that already deduct rebates. The price of the car shouldn’t reflect any available manufacturer rebates, as you should have the option of how to apply that money after agreeing to purchase the vehicle.
  • Offers to pay off existing loans, which only increase your monthly payments or extend loan terms.
  • Overpriced dealer add-ons, such as premium sound systems or paint protection.
  • Bait and switch offers, which get you in the door to look at one car and then push an upgraded version for more money.
  • High pressure sales tactics, like visible sales tallies, warnings that the deal is only good today, or long waits while they “talk to the sales manager.”

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