Five cases when buyer's remorse will cost you big
Buyer's remorse can have serious consequences — and not just the usual symptoms of anxiety, nausea and sweaty palms.
Particularly for big-ticket items, ignoring any "should I or shouldn't I?" butterflies ahead of a purchase could be an expensive mistake. Strict sellers' policies make it tough to walk away unscathed.
"If you're not sure whether you should buy, walk right out the door," said Edgar Dworsky, founder of advocacy site ConsumerWorld.org. "Consumers always think they have the right to cancel a contract or purchase, but that does not apply to everything."
These five purchases can result in big bills for remorseful shoppers:
Get ready to plead your case. "When you sign that contract [to lease or buy], it's typically a done deal," said Ron Montoya, consumer advice editor for Edmunds.com. "That's a lesson you'll have to learn the hard way." Any so-called "unwinding" is at the dealership's discretion, he said, and usually requires swapping for another vehicle in its fleet rather than a straight refund.
Shoppers could try to trade their lease or sell their new car on the secondary market, but that route won't be easy or cheap. Cars start depreciating as soon as you drive off the lot. "You're probably going to owe more on the car than it's worth," Montoya said. For example, by the site's estimates, a 2014 Honda Accord LX in excellent condition with 1,000 miles on it would likely fetch $19,364 in private sale, versus the $21,619 drivers usually pay new.
Available recourse depends on what you booked, and how soon after you're feeling remorseful. "Try to look at the policies up front," said Anne Banas, executive editor for SmarterTravel.com. "Cheaper rates usually have more locked-in policies." After booking, any leeway to soften policies is at the provider's discretion. Travel insurance will refund any nonrefundable costs from canceling a trip, but there's a cost there, too: 4 percent to 12 percent of the cost of your trip, depending on the score of the policy needed.
Some travel bookings are easier to cancel than others. "Oftentimes car rentals you can just cancel," Banas said — most won't charge you until you pick up the car. Some hotel rates are nonrefundable; others allow cancellation up to a few weeks or days before check-in, with penalties of one night's rate or more for last-minute changes.
Cruise and tour policies also vary, and often depend on how close to departure you're canceling. Royal Caribbean, for example, offers a full refund on cruises of six nights or more if you cancel at least 75 days out. Losses scale from the deposit up to 75 percent of the total booking price, with no refund offered beyond taxes and fees for cancellations 14 days out or less.
On airfare, federal rules require airlines to give consumers 24 hours from booking to change or cancel their reservation without penalty. After that, you're at the mercy of change fees — which can be as much as $200 on domestic routes — unless you booked one of the more expensive refundable fares, Banas said.
Provided you still have the packaging, gadget returns tend to be on the easier side. It's the timing that can be tight — retailers including Best Buy and Apple have short periods of roughly two weeks, ConsumerWorld's Dworsky said. (A few are more generous. Target gives gadget buyers 45 days, while Costco's return policy for that category is 90 days.)
Online returns can get expensive. "If you're buying from an online seller that does not have a bricks and mortar equivalent, that's the most likely place you'll find a restocking fee," he said. At Newegg.com, for example, it's up to 15 percent, while Amazon allows third-party merchants to charge up to 50 percent if the item is returned in worse condition than it was sold. Shoppers may also have to pay for return shipping, which can be expensive for a large item such as a TV. Shoppers might be out of luck with customized or special order items, such as home appliances and computers, Dworsky said.
Until you close, you can walk away for any reason but it'll likely cost you. "There's a lot of difficulties and legal challenges in doing that," said Michael Corbett, a real estate and lifestyle expert for Trulia.com. Depending on the terms of your contract, you might lose some or all of any deposit paid when you submitted the offer (maybe $1,000) or, if you're close to closing, the earnest money (which itself could be up to half the down payment). Some contracts even have provisions that mean you could be held responsible for costs incurred by the seller as a result of the property being off (and now back on) the market, said Chris Polychron, president-elect for the National Association of Realtors.
There are a few legit reasons a buyer can walk away without any financial penalty. The contract that buyers sign after making an offer includes several contingencies, such as securing a mortgage, the home passing inspection and an appraisal coming in at or above the sale price, Corbett said. If one of those isn't met — say, it turns out the roof needs major work and the seller won't pay the full cost for the repair — you could walk away without penalty, he said.
After closing, whatever the reason for your remorse, you're largely out of luck. "You have to prove that the seller purposefully hid or didn't disclose information to you, was deceitful," Corbett said. And even then, it's a matter for court. "You can't walk back up to the seller and hand them back the keys," he said.
Depending on what you signed up for — say a gym membership or satellite TV subscription — one of several different protections might apply. Dworsky said there's a federal cooling-off rule that gives you three days to cancel a purchase of $25 or more, but it must have been made somewhere other than the business's primary location, such as signing up for a gym membership at the gym's booth at a fair or for a cellphone plan from a rep visiting your workplace.
Most states also have a law allowing you to cancel other kinds of contracts within a certain period. Check yours to see what's covered. Washington state, New Jersey and Oregon all specifically have a three-day right-to-cancel rule on gym memberships.
Companies may offer a longer trial period. Big cellphone carriers typically let subscribers cancel a new contract within 14 days. (There can still be costs, however, including a restocking fee on the phone, nonrefundable activation fees, and the bill for any services used.) Beyond that trial period, expect to pay an early termination fee based on how many months are left on your contract. DirecTV's early termination fee is up to $480; Verizon's, up to $350.