In some situations, after buyers drive their car off the lot, they will later receive a phone call from the dealership stating that financing “fell through,” that there was supposedly an issue with the lender, or that they must come back and sign entirely new loan documents with different terms. Naturally, this leaves many people confused, frustrated, and wondering whether the dealership can legally change the terms of a car loan after the sale already appeared complete. The truth is, while dealerships may attempt to change financing terms after a buyer leaves the lot, that does not necessarily mean they are legally permitted to do so in every situation. If you are facing this issue, please continue reading and contact an experienced New Mexico car dealer fraud lawyer from Feferman, Warren, & Mattison to learn more. Here are some of the questions you may have:

Can a dealership really change financing terms after the sale?

In some cases, dealerships structure vehicle sales in a way that makes financing technically “conditional” until final lender approval is received. This is sometimes referred to as spot delivery or yo-yo financing. Essentially, the dealership allows the consumer to take the vehicle home before financing is fully finalized. In these situations, if the financing falls through, the dealer can require the consumer to return the vehicle. If that happens, the consumer is required to receive their trade vehicle back, plus any down payment. The dealer cannot take any money to cover “mileage,” “wear and tear” or any other charge. All of the money must be refunded.

And importantly, dealerships cannot simply change loan terms whenever they feel like it. Even if the deal was “conditional,” a consumer is never required to enter into different loan terms-the consumer can always simply cancel the deal. The consumer can also enter into new loan terms—if they want to.

Some of the most common examples of dealerships attempting to change financing terms include the following:

  • Increasing the interest rate
  • Extending the duration of the loan
  • Requesting a larger down payment
  • Demanding a co-signer
  • Claiming financing was denied after approval was supposedly already granted

In many situations, consumers are told they have “no choice” but to accept the new terms. However, this is not true. If the deal was not “conditional,” the dealer cannot undo the deal at all. And even if the deal was “conditional,” as is typically the case, the dealer can never force the consumer to accept new terms. The consumer can always return the vehicle in that situation.

Because of this, you should always review all documents involved in the transaction, including:

  • The retail installment sales contract
  • Any conditional delivery agreements
  • Financing disclosures
  • Copies of signed paperwork
  • Emails, text messages, or written communications from the dealership

When could a dealership be violating the law?

While not every financing dispute involves illegal conduct, there are certain situations where dealerships may violate state or federal consumer protection laws. Some potential warning signs may include the following:

  • Misrepresenting whether financing was approved
  • Failing to pay off trade-in vehicles
  • Failing to provide the consumer with license and registration in a timely manner
  • Hiding important financing terms
  • Falsifying income or loan application information
  • Using deceptive or high-pressure sales tactics
  • Failing to provide legally-required disclosures
  • Threatening repossession to pressure consumers into signing new agreements
  • Refusing to return a trade-in vehicle during a dispute

Naturally, every situation is different. You have rights under New Mexico consumer protection laws and federal lending regulations. In some cases, consumers may even be entitled to financial compensation if they were harmed by deceptive dealership practices.

At the end of the day, purchasing a vehicle should not turn into a situation where consumers feel pressured, manipulated, or trapped into accepting financing terms they never originally agreed to. If you believe a dealership acted unfairly or deceptively during your transaction, it may be in your best interest to speak with an experienced New Mexico consumer attorney who can evaluate your case and determine whether the dealership violated the law.