Buying and Selling a Car - Avoid the Pitfalls

By Roger McCaffrey-Boss | August 17, 2021


Q: I went to an auto dealership last week to buy a new car and was overwhelmed by the high-pressure sale's tactics of the salesperson. A friend who went with me told me that if I had bought the car, I would have the right to cancel the sales contract within three days of the sale and take the car back; is that true? 


A: Cars are in high demand and dealer supplies are low. Dealers are not willing to negotiate like they did last year. It is a very different market for both new and used cars. 


First, people mistakenly believe that they have the right to cancel the sales contract within three days of signing the contract. They believe that if they have second thoughts about the car all they have to do is drive the car back to the dealer, turn in the keys and then they won't have to make the payments they committed to make for the next 48 to 72 months. They are wrong!


The three-day right to cancel a contract only applies for businesses that go door to door to make their sales. For example, if you had a carpet business come to your house, you could cancel the contract within three days of your signing the contract. But, if you go to the sales location of the business, be it the store or auto lot, you don’t have the same right. 


Some tips when buying a used car from either a dealer or private party. First, take the used car to a qualified mechanic before you are committed to buy the car. If the dealer or seller balks at that suggestion, buy another car. 


If you are trading in your old car and the dealer wants your car key to test drive your trade-in, give the dealer a duplicate car key, do not give the dealer your keyring with your keys. Many times dealers will “misplace” your keys keeping you trapped in negotiations with the salesperson. If you have a duplicate key, you can always leave the dealer’s lot.


When buying a used car, understand the term "as-is" on the sticker of the car's window. Federal law requires that each used car display a "Used Car Buyer's Guide" sticker in the window informing all potential buyers whether there is a warranty on the car or whether it is being sold "as-is." If the car is sold "as-is," the buyer is responsible for repairing any problems. And remember the warranty is only as good as the dealer standing behind it.


If you decide to sell your old car on your own (you can usually get a higher price than what the dealer offers you for a trade-in) you will need your original car title. If your car was financed and you still owe money on the car, the title will be with your bank or finance company.


When you and your prospective buyer agree on a price, payment to you must be by either a certified or cashier's check or cash. Don’t take a personal check. Once you sign and deliver your car title to your buyer, it’s gone forever. Also, you will need to complete two bill of sale forms, one for the seller and one for the buyer, and on both forms put the names and addresses of both the seller and buyer, a full description of the car – make, model, year, price, date and vehicle identification number.


Date the bill of sale the day you deliver the car and include the correct sales price. Many times buyers will want you to understate the sales price so they will have to pay less in sale’s tax to the Illinois Department of Revenue, it’s not wise to do it. It’s the buyer’s responsibility to pay the sales tax on the purchase.


Finally, take your plates and sticker from the car. If you let your buyer use your plates and he or she is involved in an accident, it could take a lot of effort to get out of the ensuing mess.


Roger McCaffrey-Boss is a gradute of Hamline University School of Law, St. Paul, Minnesota, and is a member of the Chicago Bar Association. You can email him at RVMLawyer@aol.com. He suggests that you consult your own lawyer for any specific questions regarding the issues raised in this column.