Legal Question in Business Law in California
I recently asked a question about my auto purchase. The dealership called me after a week saying we need to redo the contract due to the interest rate not being accepted by the bank and it will be higher which means my monthly payment will be higher. They were aware of my credit history obviously and they should know what their financial department will accept. You came back telling me I should go back and sign new paperwork as I don't get the car for free. Well that is pretty obvious but once a contract is signed it shouldn't be able to be changed. A contract is a contract is a contract! If I was to decide a week after I bought the car that they charged me too much for the car and we should change the contract, I don't think they would go for that. Can they really come back a week later and make changes to a contract that is already signed and increase my payments? If the can then what good is signing a contract as it doesn't mean anything.
2 Answers from Attorneys
You have two contracts here. One is the sales contract. One is the financing contract. Your sales contract probably has a clause that you will finance... You signed a finance contract that is subject to acceptance by a financial institution... If they did reasonable steps to get it accepted by a bank and it was not, because of that condition the contract would not be formed until the condition was met.
So although you signed it, based on the most likely scenario there was no contract formed because the conditions were never met.
You can always seek your own financing.
The sales contract is conditioned on you receiving financing. If the dealership uses good faith in obtaining financing for you and fails in that endeavor, the dealership is not bound to the first contract with them.
You can read more on "Conditional Contracts". Search it in your favorite internet search engine.
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