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Question: I signed contract to purchase auto from auto dealer. Bank declined loan same date as contract. Not enough collateral in vehicle. Then bank financed it and told me I had to take the car, because I signed a legal contract. I did not sign another cotract. Bank told me they used contract on vehicle that it declined to finance. Told me that they would contact the three credit reporting agencies & ruin my credit. They financed the total amount on the Refusal letter, not the offer to finance. I this legal?
Response: Yes. Unfortunately, the contract you signed for the purchase of the car and the loan application you made for financing of the car are two different things unless your contract was contingent upon you getting financing on the first try. If this is the case, then once you received the refusal letter from the bank, the contract became null and void and thus the bank's attempt to finance the second time around would be void. However, if your contract is not contingent on financing approval on the first try or even second or third tries, etc., you are still liable to purchase the car under the contract and the dealer can hold you responsible for the contract and the bank can try to still finance the vehicle after an initial denial. So, you need to review the contract that you signed with the dealer very carefully. You also need to review the Offer to Finance and refusal letter very carefully. Your remedies would be on those three documents. Nonetheless, you can walk away from the purchase and refuse to take the delivery of the car and refuse to make any payments on the car. Then the bank may report you to the credit reporting bureaus for non-payment.
You can sue the bank for unfair and deceptive practice and ask the Court to order the bank to remove the derogatory information from your credit file, for going ahead to finance the purchase of the vehicle knowing that there is not enough collateral on the vehicle.