If you’re buying a financed car from a dealership this holiday season, make sure you ask if there’s a ‘bailment agreement’ in the sales contract.

This type of contract legal relationship means the dealership has the authority to take the car back if they can’t secure lending for the car you’re about to drive off the lot. Some used and new car buyers who’ve been forced to return their newly purchased vehicles were shocked because they thought when they signed the contract and were given the keys to drive off the lot, the car was in their ownership.

“So essentially, a bailment agreement is an agreement to take temporary custody of something. So, in the situation with these cars, what they’re doing is saying ‘sign here on the dotted line and we’ll probably give you this car, but temporarily until the financing contract comes through,” says Allison Marani, a Savannah attorney at Roden & Love Law. “So, really when you sign this bailment agreement, it’s only a temporary agreement and subject for financing to come through.” 

Commonly, under this bailment agreement, the dealer has 30 days to try to secure financing for the vehicle that a buyer has already driven home. So, even up to day 29, the dealer could take that car back if lending is not available with your credit. 

Don’t expect to sign a separate document for the bailment agreement. Usually, its written in the sales contract or within the finance agreement.  “What you want to do and probably the best practice for a consumer would be to make sure that it is a purchase and sale agreement, says Marani. “And you’re going to be able to do that by insuring that the financing has gone through.”

This means a buyer should ask for the name of the lender financing the car, their contact information and a formal letter confirming loan acceptance for that particular car at that agreed price. 

 “So before you take the car, and before you leave the dealership just ask them ‘hey is this my car? and do I own it? Have you been paid or not? And if they can not give you a finite answer and tell you for certain that you paid for the car and everything has come through, you’re gonna want to be suspicious and ask a few more follow up questions”, says Marani. 

Also keep an eye out for terms like “conditional sales contract” or “pending assignment”, that could mean you’re not fully financed for the car you’re considering to buy.