Tips on Buying Cars: Returning a vehicle, delivery agreement, payment contract

Question
Hello, Mr. Beck,

I apologize if this e-mail is out of the blue, but I found this website and saw a "Ask A..." feature and, since I'm desperate for an answer on this, though I'd go ahead and send in a question, which is this:

I recently had gone to a dealership and made the arrangements for buying a car. Everything was settled (down payment, contract, etc...)and was pretty excited because it was my first car purchase. Anyway, after two car-filled weeks I received a call from the dealership explaining I needed to return the car due to them not being able to find a bank "willing to purchase the contract". Well, due to my inexperience and ignorance to the whole situation, I followed instructions and returned the car in order to avoid any legal problems. After I had explained this to some of my family and friends I was informed that what they (the dealership) had done sounded wrong and fishy and that I should have still been able to keep the car and have the dealership itself maintain the contract. Was that wrong of the dealership and was I entitled to keep the car, forcing them to take responsibility of the contract?


Thank you for your time.


Sincerely,
Ryan M

Answer
Ryan,

Thanks for your question.  You are kinda of caught in a catch 22 here.  Technically yes, the dealership should have kept the contract valid.  I am not sure what state you live in, but in Texas where I live the dealership has two options.  First the dealership at the time of delivery gets the customer to sign a form call "Conditional Sale and Delivery Agreement."  What this says is that the contracts are all valid only if the dealership can find a lender to purchase the contract within a specified amount of time.  If they do not, then the contracts are void and all monies are returned on both sides.  You get your down payment back, the dealership gets their car back.  Now, technically the dealership is the lender whether they can find a lender to purchase the contract or not.  What this means is that if the dealership doesn't find a lender to purchase the contract, then you make payments to them.  You never want this situation so it is usually better to simply return the vehicle and go somewhere else.

If you signed the form mentioned above, then you are out of luck.  I am sorry to tell you that, but its the truth.  

Now, there are a ton of dealerships out there that can help you.  This one obviously did not have very strong relationships with the banks to help you in your cause.  Go to a big dealership, and they should be able to help you.  

If you have any other questions, please feel free to ask again.

Thanks -

Jeremy