Legal Question in Consumer Law in Georgia

Your friend did everything wrong, and he's out of luck (as he will find when he actually reads what he signs).

It is foolish to buy a car the way he did. You NEVER do it that way. How you do it right is to go to a bank or other lender before you car shop and get preapproved for financing. (You can always see if the dealer can beat the deal). You never take the car home until the lender okays the deal.

BTW, no one should pay 24.99% on a car loan. That's ridiculous. Your friend has learned a very expensive lesson.

It is unethical for me to discuss your friend's case with you. However, my advice would be to read the car contract. Some general rules of thumb - there is no right to cancel a car contract unless the car dealer has a specified right to cancel period. What this generally means is that if you sign it you buy it. That means you have to pay for it if you want to keep it.

Most car dealers will "spot" you a car, i.e., they will let you take the car home even though the deal is not final since the lender has to approve. This is legal. The bank lender is an important part of the transaction, but they are not preseent when you buy a car. So final approval of the loan is up to them.

Car dealers know this but they want to sell cars really bad as sales people are paid on commission. So sleazy sales dudes say anything to get you to buy. Car dealers let you take the new car and hope you will love it so much that when the bank turns down the loan, you will come up with a way to keep the car rather than give it back.

Some ways to protect yourself: (1) know your credit score and arrange for financing through a credit union or another lender BEFORE you buy the car. That way, the situation you described will not happen. (2) Do your shopping online first - check out www.carsdirect.com. Is your friend a member of a credit union or Sam's Club or AAA? Many dealers have negotiated special prices for group members. Ask so you always get the best price. No method is foolproof, but doing your homework before you buy eliminates a lot of problems.

What to do here? Why do you get to swap the car if your friend financed it? Are you illegally trying to buy the car because your friend has better credit than you? Don't do this. It does not matter that your friend has insurance on the car or that the bank was closed.

Your friend's remedy is: (1) either find a way to put more down if you think the car is worth it (its not): (2) give the car back to the dealer and start the process anew (best option - this dealer is sleazy and I would not want to deal with them); or (3) if the deal will not work for this car, try and find a car within your range that will work. If the bank will not finance the car, find a cheaper used model or another model that holds value better than the Aveo from Government Motors and see if the dealer will do that instead.

If your friend is giving the car back, the dealer is allowed to charge for use of the car. Do not drive it except to bring it back to the dealer if your friend is not going to keep it.