Cooling off periods when buying cars

From 28 January 2003 a one day, waivable cooling off period applies to purchases of new and used cars where the purchase is financed by a linked credit arrangement. Linked credit is where finance for the purchase is provided by or facilitated by the motor dealer selling the vehicle.

A purchaser may terminate the contract by giving written notice to the dealer during the cooling off period. The notice of termination must be signed, either by the purchaser or the purchaser’s solicitor or barrister. The right to terminate a contract may be exercised even though the purchaser has taken delivery of the motor vehicle concerned.

On termination of the contract the purchaser is liable to pay the dealer $250 or 2% of the purchase price, whichever is the lesser. (This means 2% of the purchase price for cars priced $12,500 or lower and $250 for all cars over $12,500).

There is NO cooling off period for sales:
1) of motor vehicles other than cars (eg motor bikes, farm equipment);
2) of commercial vehicles;
3) at an auction;
4) paid for by cash;
5) on credit other than linked credit. (The cooling off period does not apply where credit is provided by a finance institution contacted directly by the purchaser, that is, where the dealer does not provide, arrange or facilitate the credit);
6) where credit is provided by a linked credit provider of the dealer but the provision of credit is not arranged or facilitated by the dealer;
7) made by a motor dealer to a trade owner.

The cooling off period begins when the contract is signed (entered into) and ends at 5pm on the next day on which the dealer carries on business with the public. However, if the dealer closes for business before 5pm on that day, the cooling off period ends at the close of business on the next day the dealer is open for business following that day.
Example A: a dealer is open for business 9am to 6pm Monday to Saturday and 11am to 3pm on Sunday. If a contract to purchase was signed on Friday the cooling off period would end at 5pm on Saturday.
Example B: a dealer is open for business 10am to 7pm Monday to Friday, 10am to 3pm on Saturday and closed Sunday. If a contract to purchase was signed on Friday the cooling off period would end at 7pm on Monday.
Example C: a dealer is open for business 9am to 4pm Monday to Friday, 10am to 4pm on Saturday and closed Sunday. If a contract to purchase was signed on Saturday the cooling off period would end at 4pm on Tuesday.

The cooling off period may be extended by a provision in the contract of sale or by agreement with the dealer.
The cooling off period can only be waived by the purchaser signing the prescribed form. The prescribed form is Form 21 in the Motor Dealers Regulation 1999.

(Source: Office of Fair Trading NSW)