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Can a bank revoke a loan on a car after I signed the contract?

Hagerstown, MD |

I bought a car in PA. I live in MD, The bank approved my loan. I drove the car for a week when the dealership called me and told me that they pulled out on the loan. I am currently laid off and I told the dealership that. My employer told them that I was on lay off status. Now the dealership wants the car back. The contract says that I do not have a cooling off period right. I have read it several times and can not find where it reads that they can change their minds either. Can they really do that?

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Attorney answers 3


See if there are any financing contingencies in the contract for your employment. It's pretty much impossible to qualify for a loan without a job, and maybe you orally told the dealer this, but your application claims that you're employed.

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Maybe. Maybe not. Let me explain. But one thing is for sure-the dealer probably knew from the start that your loan would not be approved. It may be hard to believe, but it is true that car dealers will sometimes deliver a new or used car to you and have no 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’s, then they take you out of the shopping market and that keeps you from buying somewhere else. They only worry about setting up the financing later. If they can't get a lender, then they may call you back and say they need you to get your own loan at your own bank yourself, or you have to come back to the lot and sign a new contract for one reason or another (such as, you don't qualify with that lender, they want more money down, etc). In many states, that can be illegal. Look at your sales paperwork for a document that is often called a Spot Delivery Agreement and then check with a local Consumer Law lawyer. A Spot Delivery Agreement is 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, if you were buying the vehicle for non-business (personal) use. If your amount being financed is less than $50,000 (look at your finance contract's "federal box" where key finance numbers are stated) then it's very likely to also be a violation of the federal Truth In Lending Act too (that’s a federal financing disclosure law that protects consumers). 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 accepting your cancellation of the deal, but of course they won't tell you that and they, in fact, will probably say they don't have to let you do it your way 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). To learn more about Fraud, read this free online Avvo Legal Guide “What is Fraud?” here: Call your local attorney's Bar Association 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. Also, for every legal right you have, you only have a limited amount of time to actually file a lawsuit in court or you automatically lose (it's called the statute of limitations), so don't waste your time getting to an attorney and finding out what your rights are. The key to the whole thing may be whether or not your finance contract has the car dealer's name listed on it as the "creditor" or "lender" in the financing. If it does, then the dealer may be stuck with having to take your payments or letting you cancel the deal if you want. Get to a local lawyer and find out. But act quick before your rights expire. If this answer was helpful, please give it a “Vote Up” below. Ron Burdge,

This answer is for general purposes only and does not establish an attorney-client relationship. Click the link to find a Consumer Law attorney near you.


My guess is that the bank never approved the loan. What probably happened was that the finance person at the dealership tentatively approved you, with the idea that if the first financing failed, they's find some lender willing to issue a loan, in which case they'd have you come back in to sign a new loan (often on worse terms than the loan you were initially promised). They want to make a sale and want you to just take the car and drive off the lot, then they try to get you to take whatever loan they can qualify you for; however, they cannot make you accept any terms you did not originally agree to. It's a form of bait-and-switch. In your case, though, it appears they could not get any lender willing to give you a loan, on any terms. That means the car is not paid for, and you will not be able to keep it for free. The MVA has a division that deals with consumer complaints regarding dealerships. If you believe that the dealership has acted improperly, you might try going to this site, and downloading a complaint form: