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What are my rights if auto dealer and credit union cannot finance a car I have taken home?

San Jose, CA |

I bought a used car in and prior to signing, I told the dealership I was preapproved by my credit union but I has not finalized the credit union's financing and wanted to explore other financing options at the dealership, a large chain dealer. The dealer ran my credit and offered a better APR from my credit union. Them manager said I was approved and had verified my income and explained that they have a long-standing relationship with the credit union. I signed a contract stating sales price, APR, and payments/term and I picked up the vehicle the next day. One week later, the credit union called and asked for other documents from me, however I told them the dealer had shown me approval for a different amount and rate. What legal recourse do I have? Does the dealer have ten days to cancel

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Attorney answers 2


When you finance with a car dealership, you are giving them consent look at your credit reports and to try to assign your contract to a more traditional financial institution, such as a bank, credit union, or motor vehicle financing group that regularly does business with the dealership, which also has the right to check your credit reports to determine if they are willing to accept its terms.

If all of them reject the buyers' credit application and contract with the dealer, the dealer would be advised of the rejection(s). Also, the financial institutions are required to send the buyers written notice by mail of taking an "Adverse Action" (a term from the Equal Credit Opportunity Act).

As stated in the standardized dealer purchase contract, the dealer may elect to rescind (cancel) the contract with the buyer(s), who must promptly return the vehicle to the dealer, which must promptly refund to the buyer all consideration paid, such as a trade-in vehicle and money. If the buyers fails to return the vehicle to the dealership promptly, the dealership will either repossess it from the buyer with a tow truck or sue for breach of contract and possession in Superior Court.

You should determine your legal rights specifically and find out if any laws were violated. Consult with a consumer lawyer who handles car dealer cases. I have linked below to the find attorney with the National Association of Consumer Advocates. Be sure you save all of your car documentation and notices of rejection (including the envelopes) in a safe place (neatly in a file or large envelope) at home or the office, not in the glove box of the vehicle, in case it is repossessed.

Robert Stempler (please see DISCLAIMER below)
Twitter: @RStempler

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The dealer has ten days to rescind the contract if it cannot be assigned. The dealer must notify you in writing of its decision to rescind. If more than ten days have passed and the contract is not assigned, the dealer is stuck. If you hear nothing, be sure and make your first payment to the dealer. You could also take this up with your credit union, since it pre-approved you.



Thank you, Mr. Schroeder. The retail installment sale contract I signed didn't name my credit union and many of the fields were blank, with the exceptions of buyer (me) and seller (dealership) as well as loan term and sales price. When does the ten days begin? Is it ten calendar days from the date of contract?

Paul Bradley Schroeder

Paul Bradley Schroeder


Yes, the ten days runs from the date of the contract. I would need to see the contract to know if it is properly filled out.