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California Used Car Dealer Canceling Contracts
Anonymous8 views3 answers
Two quick questions:
A) First, my wife purchased a used car on Friday (1/23/15); today (1/26/15), the dealer calls and says that the bank needs to shorten the length of the loan (its an older used car). This is no big deal to us, as we were going to pay it off earlier, but over the weekend we found some issues with the car. So, basically, if they want to change the terms of financing, its a canceled contract at this point and we can return the car if we so choose, correct?
B) We sold her old car to a different dealer for a price, X, to use as the down payment on the newer car. However, the dealer we sold her old car to called today and said that they paid us too much and so we need to return their check and take a new offer of X-500. Am I correct in thinking to tell them "too bad?"
A) In California the dealer has 10 days with which to find you financing per the terms of the contract signed on 1/23/15. Since today is within that 10 day window, the dealer can say they couldn't find financing at the terms stated in the K, but they have to either allow you to bring the car back and give you your down payment back. If they refuse the down payment back you can take them to small claims court for that amount. The other option is you sign a new contract agreeing to the new contract terms. If the car is having issues then I would bring the car back and request your down payment back.
B) Yes, you are correct. You do not have to return their check and take $500 less, assuming you did not misrepresent anything when you took the car to that different dealer.
A) the only way to change the terms is for you to agree to changed terms. No bank is changing the terms on you. You have a contract in place with dealer for "x" terms. The dealer is trying to sell that contract to a bank and maybe, just maybe, the bank will buy on different terms? That is your "too bad" situation. You have a contract with dealer and dealer can honor it OR as it is in most contracts for cars in CA, they have a 10 day window to back out of the deal if they are unable to sell the contract to someone they regularly do biz with at terms they like, so, essentially, they can back out or they can stand by the deal, but, they cannot force you to take new terms. I would NOT talk to them but, instead communicate only in writing and make sure that you get them to commit one way or the other, ie, live by the terms or cancel, not contingent on you signing a new deal. I would also NOT mention your car's issues, as if they cancel, they cancel and then you are out.
B- You're likely right, but, it depends on the papers you signed and what they say. You may wish to have an attorney review AND hopefully, you did not misrepresent any material factor, like a prior wreck or the payoff amount, to dealer.
C- As to A above, the response presumes this is a std. Reynolds and Reynolds Ford 533-CA or 533-CA-Arb retail installment sale contract usedin most used and new car sales in CA.
Good luck with it.
Second question first: The dealer agreed to pay X dollars for the car. That's a binding deal. You are correct that their error does not affect your rights.
The answer to the first question is more complicated; it depends on the terms of the contract. Some dealers sell cars based on the assumption that they can get a bank to pick up the paper on given terms, and have sales contracts that are provisional. When these provisional contracts are abused, it's known as a "yo-yo" scam. But the long and short of it is this: if the dealer is unwilling or unable to deliver the car on the agreed terms, and if you are unwilling to agree to those terms, the only remedy is to unwind the sale. They get the car back, you get your money back.
