Here is an all too common scenario:
A customer needs a car. For the sake of this scenario, we are going to call the customer Clyde. Clyde wants or needs more reliable transportation so he goes to a car dealership to see if he can buy one. When he's at the dealership, the salesperson helps him pick out a car, the salesperson takes all of his pertinent information and has Clyde sign all of the paperwork required to purchase the car. The salesperson hands Clyde the keys to his car and tells him to enjoy his new ride. Clyde is happy he was approved for a car and drives away a satisfied customer. Clyde gets the car insured and has shown all of his friends and family his nice car.
A few days or even weeks later, the dealership calls Clyde and tells him that (1) he needs to bring the car back because the financing didn't go through or (2) that he needs to come back in to sign some more paperwok and bring a much larger down payment because the bank or lender wouldn't approve the financing without it. On top of all of this, they've already sold the car Clyde traded in as a down payment and they tell him that any money he's already paid is nonrefundable.
Clyde feels so embarrassed. He knew his credit wasn't amazing, but he gave the dealership everything they asked for: bank statements, paycheck stubs, a down payment, references, and even traded in the only car he had. Clyde is also confused. What is all this paperwork the dealership gave him if the financing didn't go through? He has a bill of sale, odometer disclosure, financing agreement and a stack of papers showing he bought a car. Can the dealership do this? To make matters worse, they are telling Clyde if he doesn't bring the car back, they might have the vehicle repossessed or reported stolen! Now, Claude is mad and feels like he's been violated, but what can he do?
Whether the dealership can ask Clyde to bring the car back depends on a few things:
- Does the contract explicitly state the final sale is contingent upon the dealership being able to locate and secure financing for the vehicle? Did they tell Clyde when they handed him the keys that the sale wasn't final yet?. They also would have to tell him that if the financing didn't go through, he would have to bring the car back. Did Clyde sign anything saying this?
- Was there a bailment agreement? A bailment agreement states that the sale is void if the dealer can't get you financed in a certain amount of time. The bailment agreement needs to be in writing and Clyde would need to know about it.
Absent the two things listed above, if a dealer tells Clyde to bring a car back after he's entered into a contract with them, they may be in violation of several laws including: fraud, truth in lending act, unfair and deceptive business practices, the fair credit reporting actand others.
These types of transactions are called "yo-yo" transacations or "spot deliveries". If this has happened to you and the dealership is refusing to refund your down payment or has already sold your trade-in, you may be entitled to damages. It is best to consult a consumer protection attorney - one who handles auto fraud to assist you with your case. Embry Legal handles auto fraud cases and would be happy to consult with you on your case.
To read more about yo-yo sales or spot deliveries in Georgia, you can visit this link: http://consumer.ga.gov/uploads/pdf/AAEP_-_Revised_102518.pdf