Dealership sold trade in before we received approval of financing.

[claw06]

What is the name of your state? Minnesota

I recently went to purchase a used car at a dealership. I had a trade in I used for the down payment. I was able to drive the new car that evening. After a couple of days I was contacted and told they were unable to secure financing for me and I would need to return the car. I returned the car that day assuming I would be driving back home in my old vehichle. I was told when I arrived at the dealership that my vehichle had already been sold, and the remaining loan on it paid. They said they would cut me a check for what was left, minus mileage I had put on the new car. So, here I sit no new car, no old car and obviously not very good credit.
My question is...how can the dealership sell my trade in before the financing was complete? Do I have any rights here at all? Any help or information would be greatly appreciated.

[seniorjudge]

Originally Posted by claw06

What is the name of your state? Minnesota

I recently went to purchase a used car at a dealership. I had a trade in I used for the down payment. I was able to drive the new car that evening. After a couple of days I was contacted and told they were unable to secure financing for me and I would need to return the car. I returned the car that day assuming I would be driving back home in my old vehichle. I was told when I arrived at the dealership that my vehichle had already been sold, and the remaining loan on it paid. They said they would cut me a check for what was left, minus mileage I had put on the new car. So, here I sit no new car, no old car and obviously not very good credit.
My question is...how can the dealership sell my trade in before the financing was complete? Do I have any rights here at all? Any help or information would be greatly appreciated.

You gave them the right to sell your car and they did.

Take the money you got and try to get another car.

[cjbrown929]

Originally Posted by claw06

What is the name of your state? Minnesota

I recently went to purchase a used car at a dealership. I had a trade in I used for the down payment. I was able to drive the new car that evening. After a couple of days I was contacted and told they were unable to secure financing for me and I would need to return the car. I returned the car that day assuming I would be driving back home in my old vehichle. I was told when I arrived at the dealership that my vehichle had already been sold, and the remaining loan on it paid. They said they would cut me a check for what was left, minus mileage I had put on the new car. So, here I sit no new car, no old car and obviously not very good credit.
My question is...how can the dealership sell my trade in before the financing was complete? Do I have any rights here at all? Any help or information would be greatly appreciated.

A couple of questions...

You say "obviously not very good credit". You were making payments on your trade, were they all on time? Were the payments on the new car more than the trade? Have you had any significant changes in your income?

At the dealership I worked at for 10 years, if we had any question about whether a deal would be approved, we would place a "hold" on the trade-in so that it would not be sold until the deal was approved.

Because you were (supposedly) denied credit, you will receive a notice from the loan agency (bank, etc) explaining the denial. Call the dealership and ask who they submitted the loan to. They HAVE to tell you.

The more info I have, the more I can help you...

Oh, and thank you senor judge for your "advice". BTW, have you ever purchased a vehicle?

[claw06]

The reason for my purchase was to drastically lower payments. I recently went through a bitter divorce. During this process my credit went from above average to horrible. The interest rate on the new purchase was 18.04%. Even with that interest rate I was going to cut my payments almost in half. The trade in was 2 months behind and I knew I needed to get something less expensive. By the way, the dealership knew all of this too. I did speak with the bank and I completely understand why I was not approved, I figured I would just go get the trade in back and try and work something out with that lien holder. So, I called GMAC and spoke with them about a "payment plan" for the late payments on my trade in. They were very cooperative and we had worked out something. But the trade in is gone...


I hope this information helps, because I sure need it!

[justalayman]

While I do understand SJ's post, I would tend to think the dealership did not actually have the right to dispose of the trade-in yet, IF the entire deal was contingent upon the financing.

If it was, then the trade-in would not actually belong to the dealership (regardless of signing the title, it was all contingent on other things happening) until the financing went through.

Since financing was not obtainable, the deal was voided.

Now the problem comes with how you should be compensated for your situation. Here is where SJ's suggestion does play a part. It may not be practical, or even possible, to retrieve the trade-in at this point. If so you deserve to be compensated for your losses which would be (presumably) the amount the dealership is refunding to you. I don't believe you should be charged anything for the miles on the new car though.

Now think of it this way. If you went to court, what would/could the judge award you? Simply put, your losses, which is what the dealership is already offering you.

Maybe one of the big dogs will come around and (hopefully) tell you you can force the dealership to return your car to you or they must return you to your original situation using some other method, or alternately pay you more than they have offered so you may aquire some vehicle. I wouldn't hold my breath on this though.

Good luck

[cjbrown929]

The reason I mentioned why our dealership, which frequently dealt with credit-challenged clients, would put a hold on trades (ie don't sell until deal is s, s and d) is the INCREDIBLE mess that happens if the trade, which holds a certain value for the dealer (called the "actual cash value"), and a typically higher value for the person who traded it in, collide.