What to do if my girlfriend bought a new car from a dealership but now it says that there is a problem with her loan?

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What to do if my girlfriend bought a new car from a dealership but now it says that there is a problem with her loan?

She signed a contract stating she works full-time when she works closer to 24 hours. She was given the car and now a week (not driven at all) or so later the dealer is calling, saying the financing company will not approve the loan and she needs a co-signer. Can she return it? If so, how and what should she do? What are her options?

Asked on June 2, 2013 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Your girlfriend has serious trouble. The financing fell through because your girlfriend lied on her application; therefore, it did not fall through due to anything the dealership did. As a consequence, she is obligated to the contract. The dealership can certainly take the car back, but they may also sue her for money due to them under the contract--for example, say the total of all payments she has to make, including interest, etc., under the contract is $25k; if the car (which has started to depreciate) is now worth $19k, they could take the car back and then sue her for the other $6k. They could also likely seek to recover legal, repossession, etc. fees from her. Her only options are to take her lumps; find other financing to honor the contract; find a co-signer, so she can get the loan; or negotiate to some other mutually agreeable settlment with the dealership.


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