The Legal Mumbo-Jumbo of the RISC Relating to the Dealer’s Right to Rescind

If you read the contract carefully, you signed a paragraph in the middle of the page titled “Dealer’s Right to Rescind” or “Dealer’s Right to Cancel.” It then refers you to a box on the back page of the RISC buried in a paragraph on the right near the bottom of the page. I have never known a dealer to ask a consumer to read the back of the contract.

This box actually tells you the dealer intends to sell (assign) the contract to a financial institution, and if unsuccessful, the dealer can demand you return the vehicle, and they will refund your down payment and return any trade-in vehicle. They must do this within 10 days of the purchase date. On the 11th day, they forfeit this right to have you return the vehicle. If you decide to stick with the RISC on its original terms, make sure you pay the monthly payments to the dealer in a timely fashion as outlined in the Payments section.

There is no state law giving this right to the dealer, it is only a contract provision that you unknowingly signed.

If you decide to sign a new contract, beware. This is the time to really read the proposed, new contract to see what changes the dealer has made. You can force the dealer to take out all of the high profit items and reduce the sales price. This is true especially when you have purchased a new car. If you do not get the terms you now want, walk away. The dealer must sell that new car to the next victim as a used car. They do not want to do that since the car will most often bring a lesser amount as a used car. Of course, many dealer will violate the law and sell that used car as new. The new customer then has an action against the dealer for selling a used car as new.

Many dealers also play “banker” and do not sell these contracts to a financer and never use this “Right to Rescind.” Such dealers typically charge 25%-30% interest, and you pay $10,000 for a $3,500 car. Consumers who accept these terms typically have poor credit and focus on monthly payments only, with no idea of the serious overcharges.

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