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Can a car dealer cancel my contract after it's been 17 days?

San Diego, CA |

i purchase and signed a contract on 7/27/10 to 0% and $2800 for my trade-in. I get a call that they made a mistake on the value of the trade-in and wants to re sign it for $1000. I refused. It has now been 17 days and I received two letters today. The first letter state they are canceling the contract due to not able to finance. The other was another contract.
Can they do this?
I am very suspicious of this.
1) They sold my trade-in at auction.
2) "They" (Finance manager & finance associate) tried to convinced me to a longer term at 1.9%
3) If they couldn't get approval for a loan with $2800 down payment. How can they with a $1000, if I was to re-sign?
4) I have a 700 credit score, but a first time buyer.

I would like to know your thought on this.

Attorney Answers 4


You should be suspicious, because they probably knew when they sold you this vehicle at the rates and terms on the contract that they would be calling you back to sign a different contract with higher interest and less favorable terms. That deceptive practice is known as "bait and switch." I commend you for recognizing it when they pulled this on you 17 days later. By selling the vehicle, they have now made you believe that you must deal on their terms, because your trade is gone, so you may believe that the best you can get from them now is the value back, less the loan payoff of the original loan on the trade. You may want to call your lender to ensure that they were paid off.

I'd suggest you immediately contact a consumer car fraud attorney, before stepping foot back at this dealership. I would not do a thing or say a thing to them, and keep the vehicle until you have consulted with such consumer card fraud lawyer, who can review the documents and facts with you and give you the advice you need to combat any further fraud that this dealer may wish to apply. Below is a link to consumer lawyers, which you can search by area of expertise and state. Please be aware of the statute of limitations.

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If the contract you signed made the dealer's obligations to you contingent on you qualfiying for financing and you didn't qualify, then the contract gives them the right to rescind (cancel) the contract. Normally rescission means that the parties each give back what they gave, and the dealer can't do that if they already sold your trade it. You need to review your contract to see what you agreed to.

It also sounds like the dealer is doing a "bait and switch" to get you to sign another contract that's even more advantagous to them.

If you signed something you didn't fully understand the first time, don't do it again. See a lawyer so you know what you're getting yourself into.

Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.

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I concur with my colleagues above. Be sure to discuss with your consumer fraud attorney the prospect of collecting punitive damages as well.

Further, while your lawyer may not use this as a bargaining chip, you may want to contact the state attorney general's office to investigate if there are other complaints against the dealership for similar practices. In certain cases, the dealer, and the employees handling the transaction can face criminal liability, as well as be heavily fined for the deceptive practices.

If your story is as you say it is, you should be diligent in protecting your rights.

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Thank you everyone this is very helpful, I am currently going through a situation where the dealer told me I was approved and I am even driving the car around. Now i am being told I may have to bring it back or bring more money in. I specifically told them (I have the emails) that I will not agree to come to the dealership unless I am approved. Guess they are pulling the bait and switch on me and I will definitely use this information to protect my rights - of course I will research this further . Thank you all!!


After 32 years of representing consumers against car dealers i can tell you that in my experience, car dealers very rarely make mistakes. Far, far more often, nothing at a car dealership happens by accident. As hard as it seems to believe, many car dealers will sell a car to you and not have any idea of whether or not your loan is "really" approved or not. They do it because they know that if they can put you in their car and take you out of your old car, then they also take you out of the shopping market and that keeps you from buying somewhere else. They worry about setting up the financing later and if they can't set up a loan, then they may call you back and say they need more money down or the lender requires you to have a service contract as part of the deal or some other excuse. They may even say you have to sign a new contract for one reason or another (such as, a better loan rate, you don't qualify with that lender, etc). In many states, that can be illegal. Look at your sales paperwork for a document that is often called a “Spot Delivery” or “Bailment” Agreement. That's a paper that says what how long the dealer has to set up the loan and what happens if they don't get it done on time. It usually says they have 3 to 30 days (usually on the short side of that total) and that if they can't set up a loan then you have to give them back the car and maybe pay for the mileage you drove on it. Whether or not you get your trade in or down payment back should also be covered. This whole process is called "dehorsing" by the car dealers themselves (you can read a Car Dealer's Slang Dictionary at this web page: and doing it can be a violation of most state Unfair & Deceptive Acts and Practices laws (these are called “Udap” laws by Consumer Law lawyers and California has one of the best Udap laws). If your amount being financed is less than $25,000 (to find out just look at your finance contract's "federal box" where key finance numbers are stated) then doing this to a consumer very likely is also a violation of the federal Truth In Lending Act too (that’s a consumer protection law that deals with financing). Some states (like Ohio) also have a law that specifically applies to car dealers doing this sort of thing. If you don't have any spot delivery document in your deal and there is nothing on the finance contract that says it is contingent on financing approval and it says on it that the dealer (by its name) is the "creditor", then your deal may be a final contract and if the dealer can't get a lender to finance the sale for you then legally the dealer is probably stuck having to take your loan payments or else let you out of the deal, but of course they won't tell you that and they, in fact, will probably say they don't have to at all. You need to talk to a local Consumer Law attorney who deals with this kind of case (it's called "autofraud" or car sales fraud). Call your local attorney's Bar Association and ask for a referral to a Consumer Law attorney near you or you can go to this web site page for a Free Online 50 State National List of Consumer Law Lawyers ( and find one near you (lawyers don’t pay to get listed here and most of them are members of the only national association for Consumer Law lawyers, But act quickly because for every legal right you have, there is only a limited amount of time to actually file a lawsuit in court or your rights expire (it's called the statute of limitations), so don't waste your time getting to a Consumer Law attorney and finding out what your rights are. If this answer was helpful, please give a thumbs up below. Ron Burdge,

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