I signed a purchase contract 2 days ago & am doing the cash for clunkers.

It depends on your sales contract. Your sales paperwork is the first place for the answer because everything is supposed to be written down there and some dealers are now using a special form (brand new) that says you agree to pay them back if the Cash for Clunkers rebate doesn't go through for any reason. My advice is to be careful about such forms. The dealer obviously knew whether the vehicle they were sellilng you was in the dealer's name or not. You can probably make them stick with the deal. The dealer should know when the sale occurs what the eligibility is for your clunker too and should not try to change the terms of the deal. If there is not rebate, that should be the dealer's fault because they should ahve known what the situation was with their own vehicles. But watch out for that "clunker" form. Even the federal government is now saying you should not sign such a “you will pay us anyway” clunker rebate form. In fact, the form can be used to trick you into buying a new car on the belief that there will be a rebate, only to have the dealer call you up later (after your friends, neighbors and family have all heard about your new car) and demand extra money from you or a return of your new car. And that can put you in a very embarrassing position. This whole process is called "dehorsing" by the car dealers themselves (you can read a Car Dealer's Slang Dictionary at this web page: http://ohiolemonlaw.com/car-dealer-dictionary.html) 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). If the paperwork is all signed up and final, and then the dealer calls you back later and says they need more money, you should always be suspicious. Generally, you may even have the right to cancel the deal if you want. Some states (like Ohio) also have a law that specifically applies to car dealers doing this sort of thing. If you didn't sign any “spot delivery” document in your deal and there is nothing on the sales or finance contract that says it is contingent on clunker program approval, then your deal may be a final contract and if the dealer can't get clunker approval for you then legally the dealer is probably stuck with the loss, but of course they won't tell you that and they, in fact, will probably say you are the one who is stuck. Every state has a special "Udap" law that makes it illegal for a merchant (or car dealer) to do anything that is deceptive (some state laws also forbid any unfair acts too) to the consumer and that can give you even more legal rights. To find out for sure what your state laws say and what your rights are, you should talk to a Consumer Law attorney near you. 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 (http://www.ohiolemonlaw.com/ocll-site/ocll-locate_local.shtml) 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, NACA.net). 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 check the box below.