If you sign a contract to buy a car and need to cancel the agreement after signing, the maximum amount a motor vehicle dealer may charge for the sale not going ahead is up to five per cent of the total purchase price of the car.

It is important to note cooling-off periods don't apply to car purchase contracts in Western Australia.

The fee charged by the dealer is called ‘pre-estimated damages’ and must be reasonable and a genuine estimate of the dealer's loss.

You are entitled to receive your full deposit back and should not be charged pre-estimate damages if:

• The contract is broken because the dealer has breached their obligations.
• You withdrew your offer before the dealer accepted.
• You cannot meet your contractual obligations despite taking all reasonable steps.

Need to know more? Go to our Cancelling a contract to buy a vehicle with a dealer page.