Legal tips about used cars

Buying or leasing a used vehicle can be economical but also risky.

This month's On the Radar outlines some of the legal protections consumers have when they buy or lease from a dealer.

When the law applies

Anyone who sells or leases cars, trucks, or motorcycles as a business must follow the Motor Vehicle Dealers Act and must register with the Ontario Motor Vehicle Industry Council (OMVIC).

Consumers are not protected by this law when buying from anyone other than a registered dealer.

A registered dealer usually has a yellow-and-blue OMVIC sticker on their office door or window. Consumers can also check online to see if a dealer is registered.

Because new vehicles have manufacturers' warranties, we'll focus on the rights people have when buying or leasing used vehicles.

What the dealer must tell the consumer

The law says the dealer must give the consumer certain information about the vehicle, including:
  • the total number of kilometres it has been driven, often called the "mileage"
  • if it was ever used as a rental car, police cruiser, emergency services vehicle, taxi, or limousine
  • if it ever had any fire, flood, or structural damage, or structural repairs or changes
  • any other fact about the quality of the vehicle that could influence someone's decision to buy or lease the vehicle

Information must be in writing

The dealer must put all the information listed above and more into the written contract before asking the consumer to sign it.

The contract must also include other information, such as:
  • the name and registration number of the salesperson
  • the date of the sale and the delivery date
  • a list of all charges and taxes
  • anything the dealer is including at no extra charge, and its retail value
  • the total price, any deposit or down payment that the consumer made, and the balance due

Cancelling the contract

Unlike with some other kinds of purchases, there's no "cooling off period" once someone signs an agreement to buy or lease a vehicle. This means that they can't cancel just because they changed their mind or because their situation has changed.

But there are some situations where the consumer has the right to cancel the contract. They can cancel any time within 90 days after they get the vehicle if the dealer did not tell them:
  • the total mileage
  • the make, model, or year
  • that the vehicle was used as a daily rental, police cruiser, emergency services vehicle, taxi, or limousine
  • that the vehicle was ever considered beyond repair, salvage, or rebuilt
They can also cancel the contract within one year if the dealer used "unfair practices", such as misleading them or taking advantage of a language barrier or disability. For more information, see CLEO's publication Unfair practices.

Dealing with problems

The law says consumers must first try to resolve the problem directly with the dealer.

If that doesn't work, a consumer can file a complaint with the Ontario Motor Vehicle Industry Council (OMVIC).

If OMVIC can't solve the problem, the consumer can sue the dealer for up to $25,000 in Small Claims Court. They must do this within 2 years of when they first knew about the problem. For more information, visit the Ministry of the Attorney General's website.

For more help

Some community legal clinics or law school legal clinics help with consumer law problems. To find the nearest clinic, visit the Legal Aid Ontario website.

The Law Society Referral Service can provide the name of a lawyer or paralegal who will give a free consultation for up to 30 minutes.

JusticeNet has a directory of lawyers, paralegals, and mediators who offer help at reduced rates to financially eligible people.

If someone is suing or being sued in court, they may be able to get free help from Law Help Ontario.  
This email alert gives general legal information. It is not a substitute for getting legal advice about a particular situation.
January 2015
On the Radar is a monthly email alert from CLEO that highlights timely legal information.
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