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Your Car Financing Falls Through, Now What? (New Mexico Law)

David Humphreys May 18, 2021

"Spot Delivery" and Your Rights in New Mexico 

When you are buying a car, don't trust the car dealer to get you financed. The dealer usually marks up the interest rate anyway. Get your own financing from a credit union or a local bank before you start shopping for your next vehicle.

Whatever you do, DO NOT sign additional paperwork at the dealer after you have left the lot without speaking with a knowledgeable consumer protection attorney. 

New Mexico Has Special Rules  

The law in New Mexico is clear. There have been so many customer complaints about the issue, that the state drew up rules more than ten years ago to prevent unfair car dealer business practices. Unfortunately, some car dealers push the law past the breaking point but it's up to you to learn and enforce your rights. 

In New Mexico, it doesn't matter if you buy a car or a truck (or even a motorcycle or RV) or whether you use it for family, business or any other purpose. 

What Is “Spot Delivery”?

Car dealers rarely finance expensive vehicle sales. Most dealers simply arrange financing for you and sell the loan agreement (usually with a markup) to a bank or other lender. Spot Delivery is the practice of a car dealer financing a vehicle, allowing you to take delivery of the vehicle and drive off the lot, all on the condition that you get approved for financing by the bank or other actual lender. 

Why Does It Matter?

If you have a spot delivery agreement and even if you agree on all of the terms and sign all of the papers and park “your” new vehicle in your driveway, it technically isn't your vehicle until the financing goes through. AND, this gives a shady dealer the change to try to rewrite the price, monthly payment, interest rate or other important terms. 


What Are Your Rights?

If the dealer conditions the sale on getting you financed, it is illegal for the dealer to:

               A.  Tell you verbally or in writing that the sale is final or complete before financing is actually approved by the true lender. 

                B. Refuse to void all agreements if financing is not finalized in 20 days from the day you drive the vehicle off the lot.

                C. Fail to return your down payment or trade in

                D. Sell or remove your trade-in from the lot before financing has been finalized and the sale completed.

Is There Anything Else I Need to Know?

You also have the following rights and remedies of if the dealer fails to get financing finalized in 20 days:

                E.  Should the dealer, move or sell your trade, it must pay you the full retail price (what they would sell it for). Also, if anything happens to your trade in, the dealer has to pay for any loss while they have it. 

                F. If any payments come due on your trade in before financing is finalized, the dealer must make the payment, but you must return that payment if you cancel the sale as permitted. 

G. The dealer cannot charge you for any costs associated with the refurbishing, repair or maintenance of your trade-in or for amounts to pay off your trade.  However, should  you rightfully cancel the sale, you must repay to dealer.

                H. The dealer must state on the sale contract in no less than bold 12 point type, (the same size and bold format as written here) signed ONLY by the buyer subject to the financing contingency:  SPOT DELIVERY: Buyer has the right to void this purchase if financing is not approved within 20 calendar days after delivery of vehicle.  Buyer has the right to the return of any trade-in and all money paid     by buyer, if buyer voids this contract under this paragraph.  To exercise this right, buyer must return the vehicle to the dealer in the same condition as received (normal wear and tear excepted), within 48 hours of receipt of notice that financing was not approved.  Dealer shall not charge any fees as long as the vehicle is returned as provided in this paragraph.

                 I. The dealer may not charge any mileage or use fee if you rightfully cancel the sale if financing is not finalized in 20 days. 

                J. The dealer may not say or lead you to believe that you do not have the right to cancel the sale. YOU HAVE THE RIGHT TO WALK AWAY if the dealer breaks the rules. 

If you have questions about a car purchase or financing agreement, please contact us for a free consultation.