Car dealer want me to sign a new contract. What should I do?

I am from California. We bought a new car with my wife's college graduate discount. We send them the college diploma as proof. About 2 weeks later, the dealer called us and said that in order to qualify for graduate discount, my wife has to prove income too. (this is not same as what they advertised on website. only proof of employment is needed.) My wife send her pay check. She is a salewoman so her recent paycheck was somewhat different from the application. They said it is not enough and They want us to come back and sign a new contract without that rebate $1000. But, I am primary signer, she is just co-signer and my income is a lot higher.

Today, they call again. They said "they will honor the contract. But we must come back and signed a new contract. Everything will be the same. Instead of college rebate. They will simply reduce $1000."

But I don't understand why we need a new contract. So, I said I will think about it and will give them answer tomorrow. Then, the lady threaten us that if we don't come back and sign it, our loan application will not be approved and we have to return the car or they will come and tow it.

So, what should we do? Go and sign it or fight it. please let me know what you think. Thanking you in advance.

You want to take your chances that they won't take the car? All auto financing is contingent upon approval and sometimes falls through after the customer takes possession. Just because you have the keys doesn't mean it's your car.