Can I Cancel Auto Financing Within a Month?

The short answer is no! You can’t simply hand back the keys to a vehicle and say you want to cancel your auto financing.

However, dealers understand that all Canadians may encounter unexpected difficulties that leave them unable to meet the agreed obligations. In this situation, Hayden Agencies is always willing to work with its customers, seeking solutions that are satisfactory to everyone.

What about Buyer’s Remorse?

In general, Canadian law offers no cooling-off period when customers can withdraw from a vehicle purchase agreement. In fact, that’s why every contract has a specific review-before-signing paragraph alongside the signature line, as these agreements are final and binding.

However, there are a few exceptions, when consumers have the legal right to cancel auto financing and request refunds. These situations include:

• specific conditions have not been met, such as a lack of disclosure;
• failure to comply with the Motor Vehicle Dealers Act (MVDA);
• unfair business practices, as defined by the Chartered Professional Accountants of Canada association;
• unmet conditions that lead to the deal being cancelled, when down payments must be returned; and
• the contract has not been signed or witnessed properly by people authorised to do so.

Will I Get My Down Payment Back?

Although there’s no legal obligation to do so, customers needing to cancel their auto financing agreement can ask for a refund, but with no guarantee this will be accepted. The chances of approval are higher if contracts have been signed very recently, and the purchaser has not yet taken possession of the vehicle.

The best approach is to be honest with the dealer, explaining the entire situation in writing through a registered letter, and submitting a formal request for reimbursement. If this doesn’t work, here are five other ways to get out of an auto loan in the Maritimes: 

1. selling your car privately for more than the outstanding amount of your loan, which can then be repaid, with no negative effects on your credit score;
2. loan assumption means transferring your vehicle financing to someone wanting to buy your car is a win-win situation, provided that their credit score is acceptable to the financing agency agrees;
3. refinancing your auto loan will reduce your monthly payments, particularly if your credit score has improved since you signed the original loan agreement;
4. downtrading for a smaller or older model that’s more affordable, with lower monthly payments that fit more comfortably into your budget;
5. returning your wheels to the lender is the last resort, if you can neither sell nor refinance your vehicle.

Would My Dealer Help Me Ditch My Auto Financing?

Dealers have four ways of responding to buyers wanting to back out of car purchase agreements without due cause. They can:

• tweak the deal to salvage at least some benefit, perhaps through swapping the vehicle for a smaller, cheaper model;
• go for the goodwill, cancel the contract, and perhaps even refund the deposit, in the hope that this placatory approach will pay off later through positive word of mouth;
• seek compensation for losses resulting from the cancelled agreement, providing documentary evidence of these damages; or
• file a civil action asking the Courts to enforce the contract, with penalties to ensure compliance.

Would My Dealer Help Me Ditch My Auto Financing?

Dealers have four ways of responding to buyers wanting to back out of car purchase agreements without due cause. They can:

• tweak the deal to salvage at least some benefit, perhaps through swapping the vehicle for a smaller, cheaper model;
• go for the goodwill, cancel the contract, and perhaps even refund the deposit, in the hope that this placatory approach will pay off later through positive word of mouth;
• seek compensation for losses resulting from the cancelled agreement, providing documentary evidence of these damages; or
• file a civil action asking the Courts to enforce the contract, with penalties to ensure compliance.

Practical Advice from the Experts

What’s the worst thing to do when you need to get out of an auto loan in Canada? The answer’s easy – nothing! Just crossing your fingers while you fall behind on monthly payments has only one outcome: repossession. This will tank your credit score, making it even harder to take out future loans. Instead, talk to an auto financing specialist at Hayden Agencies, who can craft a solution that’s tailored to your needs.