What are my mother’s rights if she signed a contract for a car purchase a couple days ago but it was a bank holiday so the loan wasn’t approved, only pre-approved?

The dealer let her take the car home anyway and said when the bank approved the loan then she could come in and sign the loan contract. They called and told her the financing went through, but before my mom went to sign the loan papers, she became suspicious of the price and took the car into a specialty mechanic to have it inspected. It needs $5500 of work done. She bought the car for barely $1000 more than that, so obviously this car is a lemon. Since she didn’t sign the loan papers yet, can she back out of this car purchase before it’s too late?

Asked on November 14, 2012 under General Practice, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

No, thge contract of sale for the car is not invalidated or terminated by a failure to sign the financing contract; her obligation to go through with the sale is independent of how she pays for it (e.g. the loan). If she believes that the car is a lemon, or that the seller knew of problems/defects with it and failed to disclose them, she may have other grounds too void or terminate the sale, but the fact the she did not sign the financing agreement is not itself reason to do this. Given how much money is at stake, she should consult with an attorney, who can guide her in how best to get out of the sale, or at least get some monetary compensation.

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