Los Angeles, CA asked in Consumer Law for California

Q: Can a used car dealer keep my down payment after the bank decided not to fund the loan and I returned the car.

I purchased a car and the bank cancelled the deal. I agreed to return the car as requested after threats were made by the father and son while I was cornered in their office after being told they needed me to come down to fill out a disclosure they had missed. I hadn’t driven the car there that day so I returned with it in an hour. Drove it into the lot left the keys and called an Uber home. All the while I was yelled at by the son from his office window. I tried to not react as I knew I would be the one that would get screwed over by doing so. I left in order to solve the situation and let things calm down. They haven’t returned my $2500 down payment. Can they keep it for any reason? I already had to replace the front and back brakes due to them being destroyed and that was almost $250. I don’t know what to do as I sunk all of my saving into that down payment

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1 Lawyer Answer
James L. Arrasmith
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  • Consumer Law Lawyer
  • Sacramento, CA
  • Licensed in California

A: Under California law, a used car dealer generally cannot keep your down payment if the bank decided not to fund the loan and you returned the car. In this situation, the contract is typically considered "rescinded" or cancelled, and both parties should be returned to their original positions as if the contract had never been entered into.

Here are a few steps you can take:

1. Send a written demand: Write a formal letter to the dealership demanding the return of your down payment. Keep a copy of this letter for your records.

2. Contact the Department of Motor Vehicles (DMV): If the dealer refuses to return your down payment, you can file a complaint with the California DMV. They have a specific process for handling complaints against car dealers.

3. Consider legal action: If the above steps do not resolve the issue, you may need to consider taking legal action against the dealership in small claims court or by hiring an attorney.

Regarding the brake issue, if you can prove that the dealership sold you the car with faulty brakes, you might be able to recover those costs as well. However, this may be more challenging to prove and might require additional legal action.

Remember to keep all documentation related to the transaction, including the sales contract, any financing paperwork, and records of your communication with the dealership. These will be important if you need to take further action to recover your down payment.

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