What happens if a car dealer does not pay off your loan after you buy a car from them?

UPDATED: Oct 8, 2010

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What happens if a car dealer does not pay off your loan after you buy a car from them?

I traded my car in at a car store over 60 days ago the dealership has still failed to pay it off. After a large amount of complaining I have gotten them to reimburse me for the payments but they claim financial hardship and say they can’t pay it off. I now have both loans this one and the new on my credit and am unsure what my recourse can be. We did have a contract and they are obviously breaching there side. Can I legally go take the car back? I don’t want it but it seems like me selling it at this point is a more viable option than me financing there inventory.

Asked on October 8, 2010 under General Practice, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

You need to consult with an attorney. The short answer is, if there is breach of contract, depending on the circumstances, that breach would entitle you to either sue for monetary damages (e.g. additional costs you've incurred), to enforce the contract (e.g. to force someone to honor the terms), and/or to rescind the contract. However, you can't simply unilaterally take the car back, sell it, etc.--you need a legal determination of your rights, which will either come from a settlement with the dealer or from a court adjudication. If you act without that determination, if the other party disagrees, they may end up taking legal action (e.g. suing) against you. An attorney can help you understand what recourse you have in your specific case, as well as the cost of pursuing that option and the likelihood of success (nothing is ever given). If the dealership is in legitimate financial distress, you also need to factor in the likelihood (if you sue for damages) of winning but being unable to collect.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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