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Reversed Auto Loan?

Hayward, CA |

I took out a loan on a car on July 26th. About 3 days ago I received a registered letter from the dealer telling me that no company would finance my loan. I called the finance manager at the dealership. He said they didn't necessarily want the car back, but that I needed to speak to the salesman who sold me the car.

I spoke the the salesman and He told me the company that originally approved my loan was claiming that I have a previous repo with them. I don't have a repo with them or anyone else.

The sales person told me to give him a few days and he would work it out. That was 2 days ago and Today he sounds less optimistic. What should I do? Legally do I have to take the car back? If I do take it back, will they have to give me back my down payment, which was $2500..

Attorney Answers 3

  1. Best answer

    The CA auto sales contract gives the dealer 10 days to sell your loan to a finance company. If it can't, it can unwind the transaction. This means you give them the car back and they give you back anything you gave them (down payment, trade in, or both). If the letter is late, the dealer has no recourse so long as you make your payments on time (to the dealer, until you hear otherwise).

  2. Assuming all facts above to be correct except the date, which I presume is June 26, you should be in OK position. First, if you never had a repo with that company or anyone else, you may have a "mixed" credit file, which would give rise to a potential claim against one or more of the big three credit reporting agencies. In fact, there may be some sort of ID theft, so, you NEED to look into your credit reporting history. In doing this do NOT agree to anything online, as it may take away rights to sue folks. Moving on...

    Most contracts have a 10 day provision in which the dealer can back out, if they do not find someone to buy the contract from them. This is different than them "not finding financing." Your contract likely calls the dealer the seller / creditor at the upper right hand corner, so, if it does the dealer financed you. Make sure all future communications between you and dealer are in writing. Even if you do speak, follow it up with a writing keeping track of what was said, something like "we just spoke and you said that you did not necessarily want the car back but that you want me to speak to a salesman who sold me that car..." That way, the record exists as to what happened, should you be in court one day. OR, "we just spoke and you said to give you a few days to work it out." Same reason.

    If you go through with the unwind, it's likely your contract talks about that too and calls for you to get your money back.

    Most folks (like my firm) who handle these types of matters will give you a free document review. Please see my recent blog on Yo Yo sales, to give you a better feel for where you are at.

  3. I concur with the advice that Attorneys Schroeder and Kaufman have provided.

    Mr. Crosner is licensed to practice law in California and has been practicing law in California since 1978. The response herein is general legal and business analysis.. It is not intended nor construed to be "legal advice" but rather it is analysis, and different lawyers may analyze this matter differently, especially if there are additional facts not reflected in the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. I am not your attorney until retained by a written retainer agreement signed by both of us. See also terms and conditions item 9, incorporated as if it was reprinted here.