Can a car dealership take a car back if there is a signed contract in place between the dealer and the buyer?

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Can a car dealership take a car back if there is a signed contract in place between the dealer and the buyer?

I bought a brand new car from a well known dealership; they have my deposit and we both signed a contract. Now, 2 weeksafter the deal was done, the dealership is now saying the bank (lender) is requesting a paycheck as proof of my income. If I don’t supply the paycheck they are threatening to repossess the car. It seems the dealership messed up on the deal but they are trying to put the blame on me. Is it legal for them to repossess my car even though I have a binding contract?

Asked on April 22, 2011 under General Practice, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The issue is this: have you paid fully for the car? That is, if the car is being financed--and it sounds like it is--is the financing in place and fully committed to? If it is, then no, they can't "take the car back." On the other hand, say that you do not get the financing--the bank turns you down for some reason, such as insufficent evidence or documentation of income. If you don't get the financing, then you haven't paid for the car; if you haven't paid for the car, you've breached the contract; if the contract is breached, they can get the car back. While there may be more going on, and you may wish to consult with an attorney about this in detail, from what you write, it probably comes down to have you honored all your obligations, including securing financing or paying; or will the contract, though signed, be breached because the bank won't give you the money? If you can't come up with the money, then again, you will have violated the contract, which will allow the seller to repossess it.


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