Savvy Consumer: When Your New Car Isn't Really Yours

Aug. 25, 2006 — -- You're not allowed to return a car just because you don' t like it. But dealers are allowed to make you return the car if the bank doesn't like you. If a dealer offers you "spot delivery," meaning the dealer lets you take the car home on the spot, you may get a call a couple days or weeks later asking you to give that car back.

New and used car dealers are always hungry to make a sale. They know their best chance to do that is while you're right there on their lot. So they offer a lot of deals without getting the approval of the bank. (After all, most car sales happen on weekends when banks are closed.)

In spot deals, the dealership looks at your credit and makes a guess as to what kind of financing the bank will offer you. That's how your contract is drawn up. Often the dealer guesses wrong, and the bank refuses to give you the loan. That's when you get the call demanding that you return the car. It's an obnoxious practice. And it happens all the time.

Bonita C. headed home from a dealership in a sleek red sedan. She drove her dream car for about a month. And then she got the call. Turns out no bank was willing to finance Bonita with the terms promised by the dealership.

To salvage the sale, the dealer first asked Bonita to scrape together a bigger down payment. She did, but it wasn't enough. (Sometimes dealers solve the problem by convincing the customer to accept more expensive financing or a less expensive car.) In Bonita's case, the dealer eventually made her return the vehicle. She's one of the lucky ones. The old car she had traded in was still on the lot and the dealer gave it back to her. Often when a spot delivery falls through, the dealership has already sold the customer's trade-in vehicle.

It's amazing that somebody would let you take home such an expensive piece of equipment without knowing whether you'll be able to pay for it. But since most car sales include financing, it's possible the majority of them are spot deliveries. States address the issue in their own ways. For example, in one state consumers have the right to force the dealership to honor the contract. Unfortunately, dealers get around this by having customers sign an addendum promising to return the car if the financing falls through. Another state has effectively legalized spot delivery by requiring a disclosure statement right in the contract that explains the deal may not be final.