What action must be taken if dealer-arranged financing is not approved?

If dealer-arranged financing is not approved, the appropriate action is to return the customer's trade-in. This is because when a dealer arranges financing, it is typically part of the overall transaction that includes the sale of a vehicle and the trade-in of a customer’s old vehicle. If the financing fails to go through, the customer is not able to proceed with the purchase, and thus it is necessary to return their trade-in vehicle.

This process helps maintain goodwill with the customer and is often a requirement of state regulations, which may dictate that the trade-in must be returned if the sale does not finalize due to financing issues.

Returning the trade-in ensures that both parties can exit the transaction amicably and that the customer retains ownership of their previous vehicle. This action also helps to mitigate any potential complaints or legal issues that might arise if the dealer were to hold on to the trade-in without completing the sale.