Home » FAQs » The dealer is reneging on the interest rate after selling me a car. They are refusing to refund my deposit and return my trade in. What do I do?
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The dealer is reneging on the interest rate after selling me a car. They are refusing to refund my deposit and return my trade in. What do I do?
By Steve Swann, Esq.
While this scenario may appear extraordinary to you (and most readers of Automotive Law) we receive this kind of call several times each month.
Under Virginia law, if the proposed financing terms were rejected by the bank, you were entitled to cancel the deal and return the new car within twenty-four hours. The dealership was required to refund your down payment and return your trade-in car. The dealership's position will be that, since it will have to pay $1,200 more to your old bank to get the trade-in's title, you are not entitled to get that money back.
Your position is that this was a single transaction, trading your old car for a new one. If the deal falls through, you should get the old car and deposit back. The dealership, on these facts, would appear to have violated Virginia law by "converting" the trade-in for its own purposes by wholesaling it out. (Recognize that some dealerships fabricate the "we sold it to a wholesaler" story to get the consumer to agree to a higher interest rate.)
You need to contact your consumer affairs office for assistance. There is no charge for this, and they can advise you on your options. You may also need to discuss these facts with an attorney. If the dealership remains steadfast in its refusal to return the trade-in car and your $1000, you may need to file a lawsuit to enforce your rights.
This type of transaction -- trading in the old car and taking the new one home the same day before the loan is finalized is termed a "spot" delivery. In the future you might want to delay accepting the new car until any doubts regarding loan approval have been eliminated.
Good luck and thanks for contacting Automotive Law.
CONSUMER INFORMATION: In the Washington Metropolitan area, numerous "buying services" for new cars exist. Readers of Automotive Law with good (and bad) experiences with these buying services are encouraged to share these experiences. Automotive Law can be contacted by email, telephone, or letter as noted below.
Disclaimer: The responses to legal questions on automobile law, and the information provided by Womanmotorist.com and Mr. Swann, are offered only for general educational purposes. They are not offered as and do not constitute legal advice or legal opinions. Mr. Swann is licensed in Virginia and Tennessee, and this information should not be considered as a substitute for specific legal advice from an attorney licensed in your jurisdiction. For assistance in locating your own automobile law attorney, you should contact your state, county or city bar association, or the Center for Auto Safety, Washington, D.C.
