Is It Legal For A Used Car Company To Decline My Financing Loan, After I Have A Signed Contract

Posted in Used Car Loan

I bought a Used Car 4 days ago. I signed the contract, so did the manager/owner. I financed it through them. I pay $520/mth for a 5 year loan. I also put $1500 down. I drove the car home and thought it was over. Dealer calls me three days later and says that the loan company can’t approve my loan, even after I’ve signed the contract. They want me to sign a new contract, 4 year loan, $550/month, And have me pay an additional $1000 down. Is this legal? I have the signed contract for the original term, 5 years, $520. I have a temporary DMV card that the car is in my name. Acutally, date sold is 7/14. Thats what the contract shows because I did a phone app before I went up there. Can they repossess my car? Can they NOT approve me, after they already let me drive the car off their lot?

Please help. Desperate. Not sure if they are just trying to Extort more money from me, or if its true. Thanks!

There are 9 Answers for "Is It Legal For A Used Car Company To Decline My Financing Loan, After I Have A Signed Contract"

    1. Whatever you do,dont look at him says:

      no, just dont buy from them. your contract was for the first contract, the second one is extortion. dont buy into it.

    2. wa2yne says:

      It does not sound right to me.
      May depend on the laws in your state.
      It sounds like you need some legal advice, and I cannot answer for all states and localities.
      I have never had that happen in the past, but most of the cars were bought in NY state, and only one in California (financed by the dealer).
      It is not, in my opinion, normal to allow a person to take delivery of a car unless the financing was all set and approved by the finance company/bank.
      but some dealers do things that are not 100% legal.
      sounds like you need to reread your contract papers, and may need a lawyer

    3. quepasameng says:

      Depends. If you didn’t get financing take the car back and run. Because you are paying for a $32,700 loan. By the end of the 5 years the car is not going to be worth it. You are gonna kill yourself with the payments. Take it back and refuse to finance. Get the number of the financing company you originally signed with.

    4. Jewlz says:

      There are dealers that will let you sign and even if the financing is not in order. I’m not ruling a case of extortion, but it’s obvious it’s not a company you’d want further dealings with. You can cancel that contract, return the car and get your money back. I’d look somewhere else if I were you.
      They can write out a contract with a speculation as to what banks would approve you at, but it’s not trustworthy as a consumer. For future reference, just ask if the rate they’re giving you has been approved by a financial institution.

    5. perseus_71 says:

      I am going to agree with Jewlz above me. Dealers in their haste to push the car don’t do all the due diligence. May be it was a weekend.

      Either way return the car and take your money back. If they won’t return your money find a lawyer. Never give them the contract you originally signed.

      Before the next buy, arrange your own finance in advance.

    6. SouthernRose says:

      What kind of used car is it? If you go with the 5 year, you will be paid out $32700. With the 4 year you will be paid out $28900. So the 4 year loan is a better deal cause it will save you $3800 in the long run. If I were you and could come up with an extra $1000 and except the offer. Or you can go and find financing on your own and pay off the dealer. But yes, they can turn down a loan, cause one time I filled out a credit app and they ran it and I was approved. Later I got a letter from Ford motor credit turning me down. Luckily we decided not to go through with the deal before hand.

    7. ElGrande says:

      They did a “spot delivery” based on your credit, income, and down payment. They thought that it would not be a problem. Apparently, though, the lender did not approve the loan. It’s happening quite a bit right now due to the credit crunch. “Spot deliveries” were very common in the past, but are becoming less and less common as banks are tightening their belts.

      Take the car back to the dealer, hand them the keys, get your down payment back, and walk away. Go home, get pre-approved FIRST (through your own bank or online sources), and then go shopping again.

      Do not try to keep the car. It does not belong to you until the bank signs off on the deal. It belongs (legally) to the dealer.

      (Side note… I’d much rather sign onto a new loan for $550/month for 4 years. Less paid out, shorter term, etc. If $30/month is making you shy away, you’re already looking at too much car.)

    8. Scott H says:

      Just because you signed the contract doesn’t mean you had an approved loan. READ YOUR CONTRACT. I’m sure it contains certain contingencies, like the ability to secure financing. What they did is absolutely legal, it may not have been nice, but it is legal. It technically isn’t your car until the loan is paid off, and if financing isn’t in place, the dealer still owns the car. They can demand you return it.

    9. GILMEISTERA says:

      Yes they can do it. You signed a document agreeing to return the car if financing can not be placed. You only have two choices. – Pay the new terms or return the car and get your money back.