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Cool Off Before Making Big Purchases

Posted By Jim On 09/17/2007 @ 8:14 am In Personal Finance | 4 Comments

So you’ve done your research on a new (brand new or just new to you) car, you’ve negotiated a great price with the salesman, and you’re about to put your signature on a piece of paper that would make you the owner of that new car. However, before you pull the trigger, walk away for a few days, cool off, and seriously think about it. If you still want to make the purchase after your own personal cooling off period, sign the dotted line!

There’s a popular misconception that there’s a federal law allowing you a 3 day cooling off [3] period after you sign a contract. Within that three day window, you’re allowed to withdraw yourself from the obligation of fulfilling that contract and the law would let you off the hook for any bad decisions you may have made and found yourself regretting later. In actuality, the cooling off rule is very specific in where it applies. First, the purchases need to be over $25. Secondly, the purchase must be made away from the vendor’s typical place of business (clearly marked temporary sales location count as “typical” in this case, so a temporary dealership location) or in the consumer’s home. Lastly, there are a whole slew of little exceptions and other associated rules (the vendor has to let you know of these rights before you buy anything, etc.) that must be taken into account as well. The original intent of the rule was to protect consumers from the high pressure sales tactics of door to door salesman.

Now, based on those rules, if you go to the car dealership and buy a car then the cooling off rule doesn’t apply. You’re on the hook for that purchase and you can’t change your mind about the vehicle. Your only defense against high pressure sales tactics is if you build in your own cooling off period before you make a purchase. The salesman will try to tell you that the offer they gave you is a limited time offer (it’s not) or that they have a limited supply (they don’t), but don’t buckle. Walk away for three days and if the decision still seems sound to you, go back and sign the paper… he or she will still be there.

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[3] 3 day cooling off: http://www.ftc.gov/opa/1995/10/cooling2.shtm

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