Generally, no, a dealer cannot simply take a car back after 10 days if you have a signed contract. The deal is considered final once you've signed the paperwork and taken delivery. However, there is a major exception known as a "spot delivery" or "yo-yo financing" scenario. This occurs when you drive off the lot before the dealer has finalized your loan with their lender. If that financing falls through, the dealer may have the right to cancel the contract and demand the car's return.
The concept of a "cooling-off period," which allows you to cancel certain contracts within a few days, does not typically apply to vehicle purchases from dealerships. Your rights are almost entirely dictated by the specific terms of your sales contract. It is critical to read every document you signed carefully. Some contracts may include a clause specifically addressing what happens if financing is not approved.
If the dealer contacts you claiming the financing failed, do not simply return the car. First, ask for written proof from the lender that your application was denied. You can also try to secure your own financing from a bank or credit union. In some states, if you've already made a payment, the dealer's ability to unwind the deal becomes more complicated. Your best course of action is to review the contract immediately and, if the situation is contentious, consult with a consumer protection attorney. The Federal Trade Commission's "Holder Rule" may also offer some protection, allowing you to assert claims against the lender that you have against the dealer.
Key Factors in a "Yo-Yo Financing" Situation
| Factor | Description | Action to Consider |
|---|
| Signed Contract | A fully executed contract is legally binding on both parties. | Review all documents for any conditional language. |
| Financing Contingency | Some contracts state the sale is contingent on lender approval. | Check if this clause exists and what the terms are. |
| Lender Denial Proof | The dealer must provide proof the loan was not approved. | Request this proof in writing from the dealer. |
| State Laws | Laws regarding spot delivery vary significantly by state. | Research your state's specific consumer protection statutes. |
| Down Payment/Trade-In | If you provided a down payment or trade-in, reclaiming it can be an issue. | Document everything you provided to the dealer. |
| Vehicle Use | Excessive mileage or damage may complicate the situation. | Continue to drive the car responsibly while resolving the issue. |
