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TexLaw, Lawyer
Category: Consumer Protection Law
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Experience:  Experienced in consumer protection litigation and direct negotiations on behalf of businesses and consumers
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I purchased a new car February 12, 2013 from a dealer. The

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I purchased a new car February 12, 2013 from a dealer. The repayment contract with a 3rd party (executed by me and an authorized person from the dealership) was for 60 payments, 0% interest. I put $7,000 cash down (which the dealer cashed). A few days after the delivery of the vehicle, the dealer asked my then to provide proof of income (current tax returns) for the bank. I informed him that I do not have current tax returns but I have an internally prepared financial statement (profit/loss statement). I am a sole-proprietor. I offered to send current bank statements as a proof of income. No response until today - the dealer tells me that the bank declined the deal (I have been driving the car for three weeks now), however, they can get me a deal with a different bank - however, the terms are changed (more expensive).

My question is - I have a signed bill of sale, and a contract outlining the terms and conditions. Do I have to sign a new deal or make the dealer honor the original terms. Do they have any recourse.

By the way, I live in NJ.

Hello and welcome.

I am sorry to hear of your difficult situation. My goal is to provide you with excellent service. First, I have some questions for you so I can determine what information to provide you.

Does the purchase agreement indicate that the sale is conditioned on obtaining financing on the terms agreed? If not, what does the written contract indicate with regard to financing?
Customer: replied 4 years ago.

No - it is a standard auto contract (as far as I can tell). On the Bill of Sale, under the heading "Execution of Other Documents" it reads:

"The Customer, before or at the time of delivery of the motor vehicle covered by this Order, will execute such other forms of agreement or documents as may be required by the terms and conditions of payment in accordance with the Customer's election to purchase for cash, purchase and finance or to lease the vehicle covered by this order."


I could scan and send the front and back of the two documents (4 pages in total). Let me know.


Thank you...

Hello again, Mark.

If you can post the documents here, I could view them. The language you provided does not make the agreement to purchase conditional on obtaining financing though. It just indicates you will execute other documents as may be necessary that is consistent with the terms you have agreed to.

Unless there is something in the contract indicating that the agreement to purchase is conditioned upon obtaining financing, then both parties would normally be bound by the terms of the agreement. If the financing fails though, that would typically provide a basis for either party to terminate the agreement since one of the material terms of the contract have been rendered impossible through no fault of the parties (although it is arguable that the dealer should have requested proof of income sooner--that may be the fault of the bank though if they delayed in requesting that).

So, you could normally terminate the agreement if you cannot come to an agreement as to the terms of financing, PROVIDED your purchase agreement does not state otherwise.

I hope this helps clarify the situation for you.

It has been my pleasure to assist you. Kindly remember to rate my answer when our communication is completed so I will be compensated for my time in providing you with the information you requested. If you feel the need to provide a low rating, please stop and reply to me via the REPLY or CONTINUE CONVERSATION button with whatever issue or clarification you may need. I will be happy to continue further and assist you until I am able to explain your concern to your satisfaction. Please also remember that I cannot control whether the law is favorable to you or not, so please don’t shoot the messenger. Thank you and all the best to you in 2013.


Please feel free to bookmark the following link so you can request me to answer any future legal questions you may have:

Customer: replied 4 years ago.

Thank you for the answer, however, it is not my intention to terminate the contract. I would like to keep the car and pay as agreed, not give it back.


How do I post the scanned documents to you?

I'm not sure how you would attach the documents here Mark.

The problem you are likely to have is the dealer can terminate the contract as well if the original terms are impossible to fulfill, so you both have an incentive to come to a new agreement if you do not wish to lose the vehicle.

There should be a tool on your screen to attach a file, but I'm not familiar with the customer side of the site. If you need assistance, you can use your help button to contact customer service.
Customer: replied 4 years ago.

I'm having some difficulty uploading the file, however, I will see what I can do with Customer service.


My problem is this, I don't see anywhere where the dealer can terminate the contract once it is accepted (which it was by the finance manager). This is really the crux of my question - can they terminate the contract now?

Hello again, Mark.

General contract principles would dictate that the dealer or the purchaser could terminate the contract if one of the material terms is incapable of being performed, as I indicated above. So if the original financing cannot be obtained and you cannot obtain financing on similar terms through another lender, either of you would normally be able to terminate the contract unless you can come to an agreement on new terms.
Customer: replied 4 years ago.

I believe I understand your answer, however, I cannot find anywhere on any of the documents that I signed where there is this provision to terminate. There was no discussion about approval after the delivery. In my opinion, all of the requirements were satisfied prior to (or at) the delivery of the vehicle, specifically, it does indicate that there are "no oral agreements" (in the Bill of Sale).

Hello again, Mark.

The financing provision has not been satisfied. Certainly there is such a provision in the contract indicating the amount you are to pay and that has not be satisfied so technically you are in breach of the contract.

The contract need not say that it can be terminated if the obligations are not satisfied, that is implied by operation of law by courts. If the terms are not satisfied, the non-breaching party may terminate it if the parties cannot come to a new agreement.
Customer: replied 4 years ago.

Hold on, how am I in breach of the agreement? It clearly states an amount financed, and a repayment schedule beginning on March 14, 2013. I am not in breach of anything.


The Bill of Sale also states "Customer and Dealer agree that this Order cannot be assigned to any third party, without the written consent of both Customer and Dealer."

I'm afraid that I cannot assist you. I will opt out and perhaps another professional can assist.

Please do not respond to this message as it will send this question back to me.

Thank you for your understanding and good luck to you.

Hi Mark,

I'd like to take a look at your contract. Scan and email it [email protected] attn: ZDNlaw regarding question

These take a while to get to me, so please be patient, I'll read through your contract and see if there is anything you can do.

Customer: replied 4 years ago.

I am scanning now and will have the pdf files to you within 5 minutes.


Thank you...

Hi Mark,

No problem. Again, because we can't put up our personal emails, we have to go through the website's email exchange. This means it may take a few hours to get to me. Don't respond back to this message. Just be patient and I will email you once I've taken a look at the contract.

Hi Mark,

I've reviewed the contract. I'm afraid it's not good news.

Here is the long and short of it. You have an agreement with the dealership to sell you the car for $37,771.01. You've paid $7,000 down on the total amount due. There is no reference to any provision regarding financing in the agreement.

My understanding from your facts is that the dealership also attempted to get you financing on terms they represented you were qualified for. However, the financing was rejected by the bank because of your sole proprietor status.

You want to know whether you have to sign a new deal to hold the dealership to its terms. The dealer did not agree to provide you with financing, it was only arranging that financing for you. So the dealer is not bound by the terms of the financing it offered to you. The dealer is only bound by the purchase price. You are bound by the contract to pay the purchase price. However, because the financing fell through on the terms originally contemplated in the purchase agreement, you have the right to cancel the purchase agreement, return the car, and have your down payment returned. You also have the right to either find financing on your own, or attempt to obtain financing through the other bank that the dealership found. However, you cannot force the other bank to accept the original financing terms.

I suspect that the dealer will try to force you to take the new financing terms or tell you that they won't return your deposit. You have to forcefully tell them no and then if they don't you would need to sue them for it.

Please let me know if you need further information or have any follow up questions.

Customer: replied 4 years ago.

First of all, thank you for reviewing the documents. That being said, when the dealer (General Manager) says to me (in a text) "Bank is fine" (meaning approved) so that we could move forward - doesn't that in fact imply that it is approved based on the facts presented? I just can't find where the financing is subject to any further credit review other than what was presented in the original application.

By the way, the General Manager is a friend of mine and I have purchased a total of 6 cars from them in the last 10 years. I know they're not trying to take advantage of me, however, I've never experienced anything like this before. I used to work in dealer financing years ago for a large commercial bank and my understanding was that the dealer closed the loan subject to the terms of repayment and security agreement (lien on the car) and "sold" the paper (contract) to a buyer (usually a bank or finance company). I just can't find anything that says if they can't find a buyer for the paper, deal is off. Does that make any sense?


If you are able to point out where it says that, it would be helpful.

Wait a second, I didn't see that the credit agreement was attached to the email as well...this changes things.

Let me just get this straight. You filled out the paper work to apply for the loan, the dealer sent it in, said you were approved, and that is when you signed the credit agreement?

The you later find out from the dealer that you were not actually approved for the loan?

Customer: replied 4 years ago.

That's correct

The problem is that they led you to believe that you had a sealed deal, but if you look at the paperwork they did not actually sign the agreement. Without a signature from them, they are not bound by the terms (i.e., they never accepted the terms).

So, you cannot hold them to the terms of the deal. The dealer jumped the gun on you and told you this was approved without getting actual approval, but he was sneaky in that he did not sign the contract. If he had signed the contract it would be a different story.

So, I go back to my original assessment that you can cancel the deal and get your money back.

Technically, you likely have a suit against them for negligent misrepresentation and fraudulent inducement to enter into a contract. In other words, you would not have signed the purchase agreement had you not been told you would receive the financing as promised. The remedy for these type of lawsuits is cancellation of the induced deal.
Please let me know if you have any further questions. Please also consider rating my answer positively so that I am compensated for my time on your question by the website.

Customer: replied 4 years ago.

I did send a question last night after the previous post? Did you receive it?

No I did not. Sometimes the website application is tricky. Can you please resend?
Customer: replied 4 years ago.

I actually just spoke to a contract attorney here in NJ, his opinion (despite the lack of original signature by the dealer) is that they OFFERED a deal, performance has been made (delivery of the car), terms were outlined and agreed upon - ball is now in the dealer's hands to sell the paper. They're having difficulty and now want me to make it EASIER for THEM. Doesn't work that way

My opinion is that the deal is the deal, they're going to have live with it.


Does that make any sense? I know we want to get this closed ASAP, I appreciate the great help.

It does make sense that it could be an offer/acceptance situation arguably. You could argue they made the terms and offered them to you and you agreed.

The could argue back that an underlying assumption of the dealer was that Ally Financial would approve the financing. Now that that underlying assumption has fallen through, the defense of impossibility arises.

In other words, I don't think it's a simple open and shut case. Although I do believe that you could use the offer/acceptance argument as a great negotiating point to tell them that they have to find someone else to finance at the same rate and you expect them to stick to the deal.

But let's look further down the line. Do you expect that they would sue you over this?

Are you willing to sue them over it?
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Customer: replied 4 years ago.

While I agree with the assessment that the underlying assumption was that the deal would be funded by Ally, in my opinion, it is their responsibility to get all of the information required BEFORE the deal is signed, not afterwards. They have been in business for more than 50 years, this isn't their first transaction/approval process.


If they felt that they had a "approval" from Ally ahead of time, then I think they press matters with them and force them to buy the paper.


Any thoughts?

I definitely think you are right there. They represented to you that you could obtain financing on those terms and that you had a final deal. That is called a negligent misrepresentation.

Assuming you went all the way through with this, you would sue them for the additional cost in financing over the amount they represented you were qualified for.

In other words, if you sue, you win on that issue. They need to either (1) get Ally to accept the loan (2) find someone who will on the same terms as promised; or (3) pay the difference themselves.