If the dealership can not obtain financing for you but let you take the car anyway, you do have to return it. It is not paid for. However, you should receive your deposit back. You may have other options for financing outside of the dealership though.
Dealership Intentions
The dealer had hoped to obtain financing for you, and thought he could based on your credit information. While you probably signed contracts and motor vehicle paperwork, none of it is valid until submitted. Dealers have contracts on hand for each bank they work with, but the loan is not complete until the dealer officially submits the contract and receives payment for the car. Motor vehicle paperwork must also be submitted to a state motor vehicle office.
Other Financing Options
Find out why you were not able to obtain an approval. Your dealer obviously thought your application was loan worthy, so you may still have a chance. You may need to put more money down, which is a bank lending requirement, but not necessarily the dealer's in this situation. You may need to take a higher payment because the bank would prefer a shorter loan term because of credit and equity issues. A cosigner is always an option; find someone to sign for the loan with you who has good credit and a stable income.
Applying Elsewhere
New car dealers use a variety of banks, from local credit unions to national based lenders. If you tried to obtain financing through a smaller dealer, he may only use one or two banks. Find out how many banks the dealer submitted your application to and if any others are a possibility. If not, apply yourself at a local bank or through a subprime lender if you have have poor credit. A subprime lender (such as Capital One or Road Loans) may approve you at a higher rate, which may be your only option.
Deposits
Unfortunately, you'll have to return the vehicle if all borrowing attempts fail. Before returning the car, ask if your deposit will be ready for pick up at the same time to avoid any dealer hassles. Many dealerships return deposits with a check, and cannot do so until your check clears, which takes about 10 business days. If this is the case, ask to be called so you can pick the check up rather than take the chance of it being lost in the mail.
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