Legal Question in Business Law in California

This is a common auto dealer tactic. Research yo-yo transactions for more information.

California has a comprehensive set of statutes dealing with automobile sales financing practices which supplements and to some extent modifies general contract-law principles. It is sometimes called the Rees-Levering Act. Most auto dealers with major-brand franchises are familiar with this law and carefully abide by it, but of course there are exceptions.

I would suggest that you do two things that may help you find the answer to your question. First, read the contracts you signed with the dealership to see what it says, if anything, about the dealer's rights and duties with regard to financing or its failure to find financing. Then, get a copy of the Act, which is found at Civil Code sections 2981 to 2984.5. I think you can find it using a Google search for Rees-Levering, or on the DMV's Web site at www.dmv.ca.gov.

My guess is they can take the vehicle back; that would make sense. An exception would be if they guaranteed they could finance your purchase, or if you had a trade-in.