Cancelling a Car Contract before Estimated Delivery

cchid72 on 08/03/2023 - 15:24
Last edited 08/03/2023 - 17:59 by 1 other user

Hi,

I made a booking for a Corolla Cross in July last year and paid a $500 deposit. I signed the contract, didn't pay attention to the estimated delivery date of 30-June-2023.

In February this year we needed the second car and we decided we will get a used car instead of new car. When I went to cancel the contract (Production date not provided), the dealership said I need to pay 5% contract termination fee.

Is that a given, no way to get out off ? If I cancel I need to pay the 5% or wait till June to see if they give me a delivery ?

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Comments

  • Hybroid on 08/03/2023 - 15:27
    +12

    Does the contract you signed state a 5% termination fee?

      • Drakesy on 08/03/2023 - 16:42
        +14

        Did anyone hold a gun to your head?
        Going to need to read contracts in the future ;)

        • brendanm on 08/03/2023 - 16:43
          +11

          Haha it's only $40k bro just sign here all good

          • Drakesy on 08/03/2023 - 16:58
            +4

            @brendanm: Classic

            To be honest though th 5% would be their way of claiming "damages". I'd debate that there are any damages if no goods have been delivered. Yes its in the contract, whether or not it's enforceable is another thing entirely. Just kiss the deposit goodbye.

            • MrFrugalSpend on 08/03/2023 - 22:29
              +3

              @Drakesy: Of course it's enforceable, and it's reasonable (on face value without reviewing the contract). The OP entered a contract willingly and paid a deposit. A key thing the OP would surely have asked or been told is "can I get the car now" and there would have been some sort of discussion about a delay, yet they proceeded.

              The OP has been placed in a queue for a car, the OP would expect them to deliver on that car ahead of other people who signed one later.
              If delivery is in June they may have already started making part of it with any customisations (options, paint colours etc) back in Japan -
              There are damages like a whole lot of admin and inconvenience and foregoing projections. They would have used that commitment for planning all sorts of things (e.g. forecasts of sales that drive their decisions to order parts, commit to staff, financial projections for accounts etc) - It may seem one person is not significant, but what if everyone started doing it? We can't just assume because cars happen to be in demand right now that means the car companies should forgo normal legal rights entered under contracts because they can probably sell it without losing too much to someone else. They shouldn't need to go through the extra admin and risk because they've in fact already sold it, processed the paperwork, and put the commitments in motion etc.
              OP is lucky the contract allows that instead of forcing them to proceed with buying it - 5% is getting off lightly!

      • MrFrugalSpend on 08/03/2023 - 22:31
        +2

        When you are signing a contract for a significant amount of money, it's not "Fine Print" - it's a contract, you should read it. "Fine Print" is the tiny writing they put on the bottom of advertising material with some T&Cs. The courts in some instances when enforcing consumer protections do consider "Fine Print" unfavourably for the business depending on small size of font compared to the advertising material, how prominent to see, easy to read and understand and whether it contains unfair terms etc… but not for a contract all spelled out in equal sized text that you sign off on. The dealer is not obliged to read all of the contract out to you.
        You've entered a legal arrangement, and just be lucky they aren't forcing you to proceed with buying it (or maybe you should!?)

        You're not alone - a lot of people trust too much. I know this because when I bought my car, the dealer salesperson seemed surprised I sat there and read the whole thing before signing (He wouldn't have been surprised if everyone did it).

    • HeWhoKnows on 09/03/2023 - 08:17
      +1

      I cant believe Im actually reading this.

      An OB who did NOT read the fine print and didnt check for any cancellation penalty clauses????

      An they are here asking us????

      All I cant say to OP is READ THE CONTRACT!

      DONT ASK US!!!!!!!!!!!!

      What do you expect when YOU cancel a SIGNED contract?
      Maybe some free Krispy Cremes???

  • Employeespackbace @ Toyota Australia on 08/03/2023 - 15:28
    +36
    1. Wait till 1st of July. If no car, you get deposit back, or
    2. If the price changes at any stage between now and the 1st July, you can cancel out and get your deposit back

    Those are the 2 that are set in stone. Anything else requires the dealer to just say you're too hard basket and cancel the contract and refund you back

    Something that may help them just 'get rid of you' might be to say that you're not a fan of the service and the survey scores will be reflected as such…

    • Employeespackbace @ Toyota Australia on 08/03/2023 - 15:43
      +5

      The car didn't hit dealers till October… Did your contract get redone and reprinted by chance?

      • Overclocked91 on 09/03/2023 - 08:33

        Does the 3-month delivery time in a new car contract stand also?

        • Employeespackbace @ Toyota Australia on 09/03/2023 - 12:47

          Not if an estimated delivery date has been shown

          • Overclocked91 on 09/03/2023 - 18:38

            @spackbace: Ok, no worries. Ours did say 3 months and we managed to cancel it with a full refund of the deposit. Could be another avenue to OP to check.

  • SBOB on 08/03/2023 - 15:29
    +6

    100% they'll find someone else to immediately take that car next in the queue.
    You'd need to review the contract and see what likely excuses you can have to cancel it, and possibly lose your $500, but there's no way they'll be taking you to court over the $500.

    Jump on a local toyota corolla cross facebook page and ask if anyone wants your position in the queue for $0 and have the dealer change the delivery name to them as another alternative to show the dealer there is no contract cancellation or 'monetary loss' that could be imposed.
    Have seen that done a few times for things like Rav4's with long wait times and people changing their mind

    • tmcn85 on 08/03/2023 - 15:31

      Yep, if it was a bigger Toyota I'd consider taking the spot myself.

    • Bafranz on 08/03/2023 - 15:38
      +2

      I think they mean there's a 5% termination fee of the whole contract on top of the $500 deposit

      • SBOB on 08/03/2023 - 15:43
        +1

        true and I meant to write 5% there. No way they'll take you to court over that 5% of contract price when they could have that car allocated to a new buyer in 5 mins.

        Slow moving vehicles, complete custom order, can easily show monetary impact/loss due to cancellation and buyer should be impacted for such cancellation as per contract.
        Toyota with a 12+month wait list, salespeople pushing pre-ordering due to stupidly long back log/wait lists on vehicles, and a 100 people in front of that order which will easily absorb that stock before the sales guy has finished his first phone call about it…good luck dragging that one through any claims tribunal

  • Euphemistic on 08/03/2023 - 15:40
    +2

    It’s a bit rich when they’ll have someone grab it within minutes of you cancelling your order. Surely you can find someone to take over the contract.

    Other than that, read the fine print before you sign next time.

    • Stopback on 08/03/2023 - 15:53
      +2

      It sucks but op signed the contract etc

    • Seraphin7 on 08/03/2023 - 19:31
      +1

      What's rich about enforcing your rights under the contract?

      • Euphemistic on 08/03/2023 - 19:53
        +1

        The dealer has the clause in there so they don’t lose out if they can’t sell the car a customer ordered. Enforcing this penalty is pretty much money for nothing. They’d cancel the order and within minutes have the same car allocated to another person on the list. $2k for virtually zero work is a bit rich.

        Having said that, I’m waiting for a new car. Several times I’ve let the dealer know I’d take a cancelled order to get it quicker. I’m aware of some people walking in and collecting the same vehicle I’ve ordered in a month by getting a cancelled order, not joining the end of the queue. Dealers aren’t really out there to help you are they?

        • Seraphin7 on 09/03/2023 - 11:40

          When the OP states they simply didn't pay attention when signing the contract, and then subsequently just changed their mind, I have little sympathy for them. These clauses are in there to, amongst other things, dissuade people from simply changing their minds, regardless of "how much work" it might be to rearrange things from a dealer's perspective.

  • godofpizza on 08/03/2023 - 15:55
    +2

    had a friend who had also put money down for a corolla, a week later the rrp had gone up(also in contract too) and she decided to cancel the contract losing her desposit. Not sure if she had to pay the additional 5%.

    Without looking at the fine print, these contracts are really onesided to the dealership.

    • onetwothreefour on 08/03/2023 - 16:14

      Not if the price has changed but at this is a new model there hasn't been any price increases yet, but you never know, there might be an increase by July.

  • KaTst3R on 08/03/2023 - 16:08
    +5

    didn't pay attention to the estimated delivery date of 30-June-2023……I did not read the fine print

    Good thing you weren't buying a house…

    • djkelly69 on 08/03/2023 - 16:41

      People usually pay someone to read the fine print for them on a house purchase!

      • KaTst3R on 08/03/2023 - 16:59
        +1

        Even though so, the purchaser should still read the contract as a sense check. At least get all the basic details right like dates, names, etc.

      • Seraphin7 on 08/03/2023 - 19:33

        Correct. And do far as OzB posters are concerned, usually at the point when things first start to go wrong after they signed it.

  • Donaldhump on 08/03/2023 - 16:09
    +1

    just claim financial hardship, they will wave it all (possibly)

    • thwarted on 09/03/2023 - 08:35
      +2

      *waive

  • eatcroissants on 08/03/2023 - 16:46

    I booked a Toyota Corolla last year and I cancelled the contract after a month. The deposit was fully refundable.

  • pegaxs on 08/03/2023 - 16:51
    +1

    Threaten them with Fair Trading and say that 5% of the cost of the vehicle is an excessive punishment as a termination fee. This is an unfair contract condition and heavily favors the dealer in the transaction. Contract with unfair conditions on them are not worth the paper they are printed on.

    They are basically only allowed to make a condition that sees them back to square. ie: They can withhold a portion or all of your deposit, that is enough to cover their costs of doing the transaction, ie: wages for the salesman, the secretary, re-advertising the vehicle, any fees associated with ordering the vehicle.

    The best thing to say is: "You know what? We will keep the order… and when our first customer service review comes in, I am going to let head office know exactly what I think of your dealership… In fact, I'll give them a call this afternoon and see what they say…" Dealers do not want pre-pissed off customers as ongoing clients.

    With all that being said, this is also a warning to everyone… Don't sign car contracts (or any contracts for that matter) without "get out" clauses (subject to finance, seeing the vehicle, test drive performance, colour, anything really) and if you cant sneak a clause in there, just dont sign it if you are not happy with it.

    If you want something with the sale (mats, fuel, back massage, hubcabs lined up, no stickers), GET IT WRITTEN INTO THE SALES CONTRACT!!! Do NOT accept the word or the sales person "Yeah, we will get that sorted for you"… GET IT IN WRITING!!! If they wont write it on the contract, they NEVER had any intention of doing anything that you asked for.

    • KaTst3R on 08/03/2023 - 17:22
      -4

      ie: They can withhold a portion or all of your deposit, that is enough to cover their costs of doing the transaction, ie: wages for the salesman, the secretary, re-advertising the vehicle, any fees associated with ordering the vehicle.

      Im pretty darn sure that will be more than 5%. Corolla Cross assuming base model is $35k so the penalty is $1,750 + $500 deposit. The car itself is likely to be made in Japan and weighs 1400 to 1550 kg. Assuming even $1 per kg for shipping from Japan to Australia (this is actually unreasonably cheap, shipping cost way more than this), transport expense itself is $1.5k and you still wanna add the wages of every staff member involved + re-advertisement fees etc.

      What if the dealer struggles to sell the car and it sits in the warehouse for 3 months. Storage cost is another real cost to the company.

      I think you might struggle to justify that 5% is excessive. Because it is very reasonable, in fact it should be higher from a dealer's point of view.

      • Employeespackbace @ Toyota Australia on 08/03/2023 - 17:33
        +6

        Except the car hasn't been built yet…

        Their order is simply an order in a queue

        • KaTst3R on 08/03/2023 - 19:55

          Just assuming the car hasnt been physically built but parts are being ordered in for OPs order, shipping would be arranged in advance, etc. There is a lead time for everything. You cant just say it is on the waitless thus no cost to the company that is absolutely not true.

          As long you make an order, things are moving in the background although it is not assembled physically at the factory due to a factory capacity constraint.

          • Employeespackbace @ Toyota Australia on 08/03/2023 - 20:04
            +3

            @KaTst3R: We're not talking a custom built vehicle here, we're talking a mass produced one. If you were to look at that, that parts were on order to build this vehicle, there will be an exact match to that order further down the list and they just simply change the name of the order.

            It's really not a concern for a dealer to remove an order from the system when it hasn't gone through the production phase

            It's a Toyota, not a Koenigsegg

            • KaTst3R on 08/03/2023 - 20:11

              @spackbace: Mass produced or not, did Toyota allocate a resource or not to your order?

              And a dealer has no penalty for cancelling an order? I would appreciate for you to confirm that given you are associated.

      • Drakesy on 08/03/2023 - 18:12
        +1

        Car literally isn't even built though?
        It doesn't exist and has an extensive waitlist?

        It'd be more Toyota would struggle to justify charging for a car they could onsell at a moments notice

    • djkelly69 on 08/03/2023 - 17:37

      Contract with unfair conditions on them are not worth the paper they are printed on.

      Technically it would likely only be the unfair condition which would be null and void, as opposed to the whole contract.

    • MrFrugalSpend on 08/03/2023 - 23:27
      -1

      It's not unfair. It's quite fair to have that contract condition because without it, OP would be obliged to proceed buying 100% of the car - OP is lucky the contract allows that instead of forcing them to proceed with buying it in case they can't afford to proceed, because 5% is getting off lightly! - 5% is not unreasonable. Perhaps if it was 30%, I'd agree with you.

      Re-iterating what I said above, The OP has been placed in a queue for a car, the OP would expect them to deliver on that car ahead of other people who signed one later. They have purchased rights under a contract and made a commitment.

      If delivery is in June they may have already started making part of it with any customisations (options, paint colours etc) back in Japan - Even if not, they would have used that commitment for planning all sorts of things (e.g. forecasts of sales that drive their decisions to order parts, commit to staff, financial projections for accounts etc) - It may seem one person is not significant, but what if everyone started doing it? We can't just assume because cars happen to be in demand right now that means the car companies should forgo normal legal rights entered under contracts because they can probably sell it without losing too much to someone else. They shouldn't need to go through the extra admin and risk because they've in fact already sold it, processed the paperwork, and put the commitments in motion etc. There are damages in that alone (the admin, inconvenience, impact on resource planning and financial projections etc).
      Fair trading isn't going to require that, because they'd have to be consistent in all other circumstances (e.g. when someone does order something rare and it is already in production and there isn't a market to sell elsewhere). They can't make a rule allowing people who enter a contract to walk away from the commitment, just because in current circumstances we all believe Toyota will be fine and someone else will buy it - OP entered a contract and paid a deposit.

      Quite Fair - we all need to take some responsibility instead of expecting the nanny state to bail us out of problems we created for ourselves!

      • fadzsolz on 11/07/2023 - 07:41

        In the current market they can sell to anyone. If it were a slow market yeah that would make sense as the car would sit on their yard etc. It’s a toyota - gets picked up in no time. We’re it some other brand yes would be hard to sell.
        The dealer is being a bit of a tool, they know they have tons of buyers in queue.

        • MrFrugalSpend on 13/07/2023 - 20:55

          They also know the buyer signed a contract that said they would pay 5% if they cancelled, probably paid the salesperson their commission donkeys ago (which wouldn't be refundable), there'd be business relationships between the dealer and salesperson, dealer and Toyota, freight companies etc and corresponding paperwork that probably cost hundreds in people's time - why would they give up money someone signed up to give them just because they can probably sell it elsewhere?!
          As I said before, the state of the market has nothing to do with contract terms. They need a disincentive to stop people walking out on them once they've committed, as they never know when the market will turn.
          …the OP literally signed on the line saying they would pay - so who's really being a tool expecting not to uphold their side of the contract?
          It's business, it's contacted money for them, get realistic

          Your case detailed below, you were lucky and I'd have no qualms doing what you did if they changed the deal first. They should not have played hardball if you wanted to change to a different vehicle from them - idiots should have factored any costs associated with losses on the first deal into the into the price for the upsized model

    • fadzsolz on 11/07/2023 - 07:46
      -1

      Very good advice. Found ourselves in similar situation - wanted to cancel the order and sales rep wanted additional 5% as penalty.
      We offered losing the deposit but they were adamant.
      I said no problem will take it - correct all the issues in the process, (they lost our deposit, added options we didn’t want, made multiple unauthorized credit inquiries - mentioned involving accc and asic). A day later they call and say they’ve rescinded the contract and will refund the monies. I emailed and documented the same.
      Don’t trust words - only trust what’s written.
      I am still exploring whether I should raise the complaints against them for financial brokerage misconduct.

  • Brian McGee on 08/03/2023 - 17:05

    Cancel the contract and tell them they can keep the $500. Are they really willing to waste their time and yours going to court to enforce the contract when there are probably 50-100 other people waiting for one to arrive? And then theres the bad press you could heap on the dealership (social media, ACA). In the current market it is an empty threat just to make some more money out of you.
    Is the contract pending 'financial approval' or some other stipulations? just say you lost your job and can't get finance, easy peasy stealerships are greasy.

    • Sterio on 08/03/2023 - 17:44

      Plus the fact that interest rates have gone up again and your budget can not now cater for a new car.

      • fadzsolz on 11/07/2023 - 07:39
        -1

        Yes, we had that happen when we did a pre approval rates were 5% close to delivery they were 8%

    • MrFrugalSpend on 08/03/2023 - 23:36
      +1

      It's not a good legal idea, as you have still broken your legal commitments under contract law which could lead to a civil claim, but I agree with the first part of the statement, it's unlikely to be worth their time to pursue you. However they could sell the debt to a debt collector who will harrass shite out of you etc.

      • Brian McGee on 09/03/2023 - 07:34

        And did you do any business with the debt collector? No, so you can tell them to kick rocks too. Are the debt collectors going to take you to court for a couple hundred dollars too, I don't think so.

  • Mechz on 08/03/2023 - 17:32
    +1

    Just stop responding to them if you're ok with losing 500 bucks.

  • Gareth on 08/03/2023 - 17:54

    Obligatory Auto Expert video on this subject.

  • buellbarn on 09/03/2023 - 08:21
    +7

    I work in the industry and noone is keeping deposits or expecting cancellation compensation on these orders. The salesperson/sales manager is just trying it on to see if they can get away with keeping your money. I work in qld so may be different in other states but all the orders are subject to finance up here and it is impossible to do a finance app until the car is about 60 days away as the approvals have a time limit. If your personal circumstances change and you don’t get finance approval then you can’t buy the car. You could get married and divorced twice during these wait times for cars!! Despite what they may tell you simply explain your financial circumstances have changed and you are no longer able to go ahead and expect a full refund. We have many cancellations lately because of interest rate rises etc. They will curse and scream for 5 mins then go onto the next customer.

    • Employeespackbace @ Toyota Australia on 09/03/2023 - 12:48
      +1

      Yep this

    • fadzsolz on 11/07/2023 - 07:37

      💯 had the sales person and sales manager pull the same on us. We showed evidence of issues/gaps - eventually they rescinded the contract.
      I wonder if we can go after them for 5% or interest on deposit held 😀

  • jrvb42 on 09/03/2023 - 18:00

    I don't get why people are accepting delivery dates of 12 months. It's a car. If they can't deliver in a week, walk away. It's not a damn home! Although in this rental crisis, it might well be….
    Seriously though, there are choices, and a 12 month wait is just stupid, don't accept it, unless you have to have it due to extreme pretentiousness.

    • SBOB on 09/03/2023 - 18:02

      Clearly haven't had to order a new car in recent times?

      Generally only the lowest of desirable options would have delivery times you'd measure as 'in a week'…..

      I also don't have the patience to order a car with a 12 month wait, but in a week is dreaming :)

    • Employeespackbace @ Toyota Australia on 09/03/2023 - 18:27
      +3

      And what are the other choices? Overpriced used cars?

      Feel free to buy one of those

    • kerfuffle on 09/03/2023 - 18:45
      +1

      I'm not paying $46K for a used car when a new one is $44K.

    • fadzsolz on 11/07/2023 - 07:35

      Same here. I’ve always bought cars on the spot. Waiting is just ridiculous as situation changes over time.

  • usbc activist on 22/03/2023 - 10:18

    I think the sales guy is trying his luck. Just keep saying No and see what happens.

    • fadzsolz on 11/07/2023 - 07:34

      💯 we had the same issue

  • fadzsolz on 11/07/2023 - 07:34

    Had a similar-ish situation. Booked a car back in Feb, delivery date of June. Sales rep was yeah yeah you can cancel no problem we can give deposit back - toyota’s get sold easy.
    Fast forward to delivery time and it’s July, we find the car and found it not suitable for us - want something bigger.

    We suggest to move the car deposit to a larger vehicle. Sales guy says no - not possible we have to buy this one. We ask about cancellation they say fine - 5% penalty on to op of deposit.

    I go, No should be max 5% and would they consider just keeping our deposit as the car can literally be sold. Brings the manager in and he also does not want to budge.

    Puts us in a bit of a pickle, they were friendly up to this point but since they started waving contract in our face I pulled out the stops and picked on the flaws from their side - they lost our deposit, added options we didn’t ask for and made finance inquiries without permission, mentioned ACCC and ASIC in my response. I said I’ll buy the car, fix the gaps on your side. I get a call later from the salesman saying they’ve decided to cancel the contract and will refund my monies.

    Could have been simpler if they just did that to start with as they know they’d sell the car.

    Bottom line if they play hardball, do the same. Importantly read the contract - they’re onerous and one sided (which is ridiculous). In our case luckily they had messed about our order that we could have taken them to regulatory bodies for poor/substandard practices.

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