Q: The dealership called, claimed that they could not get my car financed, and demand I bring the
car back immediately. Can they do this?
A: Yes. In California, assuming the car was delivered to you with the understanding that the sale
was being financed, the dealer has every right to demand the car back if the dealership cannot obtain financing for you at
the terms you agreed to. In that case the agreement is deemed to be automatically rescinded, and the parties are
obligated to return all consideration given to the other. This means you must return the car, and the dealer must return
your downpayment. On the bright side, you just got to use their car for free.
Often, the dealer will try to convince you to change the contract terms, by
increasing the down payment, interest rate, etc. You are under no obligation whatsoever to do this. If part of
your down payment was a trade-in, the trade-in must be returned, or if already sold, the trade-in value or fair market value,
whichever is greater, must be returned. Occasionally, the dealership will simply tell you that no financing could
be obtained, so make the payments directly to them. Before agreeing to do this, you should have them verify, in
writing, that your good payment history will be reported to major credit reporting service(s), as it would have by, say, Ford
Motor Credit, so that your FICA score will go up. If you really want to keep the car, this is a geat time to re-negotiate
a better deal (assuming the dealership wants you to keep it). If you bought the car "new", it must be re-sold
as "used." If you bought the car "used," you may have discovered something about the car by now that is not what they
represented. Use this info to renegotiate a better deal, or eliminate/renegotiate items the finance manager
convinced you to add on to the contract of questionable value, like a service contract, GAP insurance, or any needless
and overpriced thing sprayed on the fabric, paint, or undercarriage.
