Tips on Buying Cars: change in auto finance contract terms, finance contract, signing your name

Question
QUESTION: I recently signed a contract (on 01/16/10) for a used car and of course the loan still had to be funded. I was just contacted on 01/20/10 and advised the loan was funded but with some changes to the pricing of the warranty and car. It has been my understanding that in the event of a new signing of the contract terms, you then are not obligated to continue the purchase at that time. Is this correct and what are my rights? Your immediate assistance will be greatly appreciated.

ANSWER: Kim,

Thanks for your question.  It is hard for me to answer your question without knowing exactly what state you live in.  However!  In any state in the country, your contract can always go down - i.e, your payment, your sales price, your total amount financed, but NOTHING and I mean NOTHING can ever go up, i.e, your payment, your rate, your term, your amount financed, your warranty price, your sales price, NOTHING!  Changes where ANYTHING goes up must require a completely new contract, and your signature on that new contract.  If anything went up, then they broke the law by signing your name to the contract, and you are void of any responsibility whatsoever, but you have to notify the lender and ask for a copy of the contract that was funded, before you do anything.  If that contract does not have your signature on it, then they are IN BIG LEGAL TROUBLE, IF YOU CHOOSE TO GO THAT FAR.  At the very least you can back out of the contract.  

I hope this answers your question.

Thanks - JB

---------- FOLLOW-UP ----------

QUESTION: I am in the state of California, and basically the intrest rate is going to go up on my loan and they are wanting me to come back in to re-sign and I do not agree with these new terms and interest rate. At this point, is it correct that my first contract is now null and void and am I now under no obligation to re-sign and may return the vehicle?

Answer
Kim,

No, you are not obligated to sign any new contracts whatsoever.  If you do not agree with the terms and conditions of the new contract, then you have every right to back out of the loan, if they can not get the original contract funded.  Simply tell them that you are not going to agree to the new figures and you are returning the car, and expect a full refund of any and all down payment, return of trade in, etc.  They have to allow you all of this back by state law.

Hope this helps.

Thanks - JB