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I signed a contract with a car dealership and they cancelled…

Customer Question
I signed a contract...

I signed a contract with a car dealership and they cancelled the contract due to not finding someone for loan, now they're telling me that I don't have to bring the car back and a new

Lawyer's Assistant: What state is this in? And how old is the car?

California, it's 2014 and I just purchased it on July 23rd

Lawyer's Assistant: Has anything been filed or reported?

No

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

Yes, I would like the lawyer to know that they drew up another contract that they want me to sign after they cancelled the first contract

Submitted: 11 months ago.Category: Consumer Protection Law
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Answered in 2 minutes by:
8/5/2017
Consumer Protection Lawyer: Barrister, Lawyer replied 11 months ago
Barrister
Barrister, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 42,519
Experience: Attorney,17 years experience in consumer protection areas
Verified

Hello and welcome! My name is ***** ***** I am a licensed attorney and will try my best to help with your situation. There may be a slight delay in my responses as I type out an answer or reply.

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You may also be offered a phone call, but those don’t come from me and are offered by JustAnswer and you are under no obligation to accept.

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Are you saying your financing didn't get approved and now the dealer wants you to return the car or sign a new financing contract with different terms?

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What is your legal question I can help with?

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thanks

Barrister

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Customer reply replied 11 months ago
I purchased the car on 7/23 so within that time they could not find someone to finance me, I recieved the cancellation of contract on 8/3 and it was signed 7/31. I called the dealership 8/4 and was told I do not have to return the car, that they found a bank and all I have to do is go in and sign the new contract with he said will have different terms then the first contract, which is a lower car payment by 2 dollars but a higher APR, so they have been running my credit in order to find a bank possibly even after the cancelled the first contract
Customer reply replied 11 months ago
Do I ask for my down payment back and refuse the new contract
Consumer Protection Lawyer: Barrister, Lawyer replied 11 months ago

In a vehicle purchase, there are two separate contracts that are entered into by the buyer. The first is the purchase contract that says that the buyer will buy the vehicle from the seller for a set price. The second is the financing contract that states how the buyer will pay for the vehicle. They are not dependent on each other and if the financing falls through, the buyer is still responsible for paying for the vehicle either by financing through the dealer or by obtaining their own financing elsewhere.
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It is common practice for dealers to do this, but the contracts generally always make it clear that if financing cannot be obtained, then the car will need to be returned. Standard (boilerplate) contract language says that financing is subject to third party approval. If your contract states something like that then you would not have recourse. In a situation like this, when the buyer signs the purchase contract, they are bound to buy the car. The point to remember is that the dealer merely sold you the vehicle. Financing is generally not handled by the dealer ... the dealer merely helps you obtain financing as a courtesy. Accordingly, if financing falls through, then that is an issue that the buyer has to resolve on their own with alternate financing..

Whether financing is through someone the dealer contacted or through the buyer's lender, the contract is binding. There is no right of rescission in a vehicle contract unless it is expressly stated in the contract.

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However, you should check the contract, because it is possible that the dealer guaranteed financing at a certain rate. If the dealer did that, then it must give you that financing or it would be in breach of contract.
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Accordingly, your recourse depends on exactly what you and the dealer agreed to in your sales contract.

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thanks

Barrister

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Customer reply replied 11 months ago
They cancelled the first contract so that one is voided. Seems like some type of fraud to me. I don't understand how they cancel a contract due to not finding me a bank to except the loan offer ask for the car back and suddenly have a new contract in the works
Consumer Protection Lawyer: Barrister, Lawyer replied 11 months ago

They cancelled the financing contract. The sales contract is still legally binding. So you still have to pay for the car, they just couldn't get a bank to finance you the first time around.

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You can always go to your bank and see if they will finance you. You may even get a better rate if you have an established relationship with them.

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But when they have people sign these financing contracts, they always say "upon approval" or "on approved credit" or "subject to credit approval" . This means they arent' guaranteeing you anything... they will just try to get yo approved.

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They do this because they want you in the car and down the road before the financing is ever set in stone and approved. It is shady, but all used car dealers do it and it is legal.

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Customer reply replied 11 months ago
Thank you for your help
Consumer Protection Lawyer: Barrister, Lawyer replied 11 months ago

You are very welcome. Happy to help any time, even though the news isn't great..

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So at this point, your options are to either agree to their new financing terms, or find financing somewhere else, (maybe your bank) or return the car and they could then try to come after you for any deficiency once they sold it at auction...

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It was my pleasure to work with you and help with your question. If you ever need me in the future, you can post a new question with "For Barrister" in the caption and the JustAnswer employees will get it to me.

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If you feel I have answered all your questions, I would very much appreciate a 5 star rating by clicking on the rating scale on your screen as that is the only way I receive credit for my work.

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Thanks much

Barrister

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Consumer Protection Lawyer: Barrister, Lawyer replied 11 months ago

Hello again,

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I just wanted to touch base with you and check in.

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Did you have any further questions I can help with?

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Thanks much

Barrister

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