There is a widespread misconception that contracts of this type are subject to a three-day “cooling-off period.” They are not.

There are two kinds of transactions that you do have a right to rescind, or cancel, within three days: sales outside the merchant's normal place of business, such as door-to-door sales, and loans secured by a mortgage on your existing home, such as refinancing or a home equity line of credit). In any such transaction, the paperwork will clearly notify you of your right of rescission and how to exercise it.

But these transactions are exceptions to the rule. They are covered by laws written specifically to protect consumers from high-pressure tactics (the proverbial salesman who would not leave your house unless you signed a contract) or from dire consequences (loss of your home to foreclosure), In these particular situations Congress felt that consumers needed time to reconsider once the sales agent had left the scene. Also, these laws were enacted a generation ago, when the balance between consumer and business interests in Congress was more even-handed than it is today.

You can argue that the sale of new and used cars is an industry so riddled with overcharges, deceptions, and high-pressure sales tactics that the entire industry ought to be covered by a similar law, But it is not.

This is not to say that a sale can never be canceled – depending on the circumstances, there are numerous legal theories on which a consumer may be able to cancel a sale. But it's never as simple as telling the dealer that you have thought better of it and expecting him to go along. If you have paid a down payment or given a vehicle in trade, the dealer will not willingly give it back. If you signed a retail installment sales contract, the dealer will quickly assign it to a finance company and then tell you it's too late, the matter is out of his hands.

While car dealers don't come out and say you have three days to cancel the deal, they may use tactics that play into many people's vague sense that you do. For example, they may tell you you can pay the down payment over time, or that you can drive the car home today but they won't be able to give you the title until next week. They may reserve the right to unwind the sale if “the financing doesn't go through.” These tactics create ambiguity as to whether your contract is a final deal binding on both you and the dealer.

There are several laws intended to protect consumers. But they are mostly disclosure laws. They require dealers to inform you in writing of certain aspects of the transaction and certain rights that you have. These laws are only as good as your stubbornness in looking out for your own interest.

For example, the Truth-in-Lending law requires everyone who lends you money or sells you something on time to give you paperwork showing how much interest you will pay over the life of the contract, expressed both in dollars and as an “annual percentage rate.” This law is designed to let consumers shop around among different lenders or merchants to get the best interest rate and other terms. It only works if you are astute enough to comparison-shop and assertive enough to insist on seeing the paperwork to take home and study before signing anything. Car dealers, among others, have become highly skilled at discouraging you from studying this paperwork in advance. Then they make you think you have to sign it right away once they do present it to you.

In making an expensive purchase such as a car, there is no substitute for the basics. Be skeptical. Remember that the dealer is there to get as much money from you as possible, and his sales agents are paid on commission. They make more money from selling the financing and “extras” than from the vehicle itself. They aren't there to look out for your interests.