Question:  Can the car dealer take my car back if they can't get me financed?

April 23, 2003

Tony, I'm in California and bought a car and have been driving it; now the car dealer wants the car back because they can't get it financed.

I don't want to give it back, because I need my car and can make the payments . . .can they repossess it? Can I make the payments directly to the dealer?

Theresa

Answer:

Hi Theresa,

Dealers do this crap all the time.

In order to keep you from changing your mind about buying the car, they hurry up and get you signed up on bank papers before they actually get the loan approved. This way they deliver the car to you, and in your mind the deal is done so you won't think about changing your mind and backing out of the deal.

This is called a "Spot Delivery" and it is common practice with car dealers across the nation.

The dealer has to make a judgment call based on your credit report. They have to feel pretty certain they can get your loan approved to avoid the embarrassing situation you find yourself in.

When a bank approves a car loan they pay the dealer the full amount due, and then you make payments - with interest - to the bank.

The bottom line is that in order for your sale to be complete the car must be paid for. It's unlikely the dealer will accept payments.

What You Can Do Is:

• Keep raising heck with the dealer - I mean contact the sales manager, the general manager and the owner. If you put enough pressure on them they may be able to get creative and beg the banks or call in a favor from one of them or whatever. I've seen it done before.

• I don't know what kind of credit problems you have, but the dealer must have thought it was good enough to "Spot Deliver" the car to you. Perhaps you can get a loan from your own bank or a credit union by applying yourself. Also, you may be able to get a friend or family member to either co-sign a loan with you or even as a last resort put it entirely in someone else's name.

• I am not familiar with the laws in CA regarding this situation, but I'm sure the state frowns on this practice. Contact the state Attorney General's office and see if they can help you.

In the end if you can't come up with financing you may have to give the car back. However, you may have some legal recourse against the dealer to sue them. After all, they undoubtedly lied to you and are causing you a lot of grief. This could be worth something in a law suit.

Good luck, and let me know how it turns out.

Tony Iorio