October 15, 2026 · By John C. Hubbard, Attorney
You signed the contract, handed over your trade-in, drove the new car home, and three weeks later the dealer calls to say the financing “fell through” and you have to bring the car back. Then the calls turn into threats, a repo truck shows up, and you learn the dealer never paid off the loan on your trade-in either. Texas dealers call this spot delivery. Everyone else calls it a yo-yo sale. A March 2026 decision from the Houston court of appeals, McCarthy v. Wisch Auto Group, says the dealer’s whole theory is wrong, and it gives Texas buyers a clear set of claims. John C. Hubbard, LLC handles these cases for consumers in Houston, Dallas and across Texas.
The contract was final when you signed it
The dealer’s position in a yo-yo sale is that the sale was conditional on a bank buying the contract, so when no bank did, there was no sale. In McCarthy, the Fourteenth Court of Appeals rejected that outright. The retail installment contract named the dealership as the seller and creditor, set the price and the payments, and said nothing about third party financing. It was binding when signed. The dealer’s plan to sell the contract to GM Financial was a separate transaction between the dealer and the lender, and the lender’s later refusal did not undo the sale to the buyers.
Texas law already said this. Finance Code § 348.1015 provides that a retail installment contract “may not be conditioned on the subsequent assignment of the contract to a holder,” and any provision that tries is void. The separate “conditional delivery agreement” dealers have buyers sign does not help them either: under § 348.013 that agreement becomes void the moment the retail installment contract is signed. The court applied both statutes as written. The dealer is the creditor, the contract is the contract, and the risk that no lender wants the paper belongs to the dealer, not the buyer.
What that means when the dealer comes for the car
A dealer that takes the car back after a binding contract, with the buyer current on it, has no right to possession. In McCarthy the dealership’s conduct after financing collapsed, threats of criminal charges, calls to law enforcement, repossession agents sent to recover the vehicle, became the basis of claims under the Deceptive Trade Practices Act, the Texas Debt Collection Act, and the Finance Code. The court of appeals revived those claims after a trial court had thrown them out. The same conduct also supports a wrongful repossession claim, and because the dealer had no present right to the collateral, the repossession agent is exposed under the one section of the federal FDCPA that reaches repo companies, 15 U.S.C. § 1692f(6).
The trade-in
This is where yo-yo sales do the most damage. Texas Finance Code § 348.408 requires the dealer to pay off the lien on your trade-in within 25 days of the sale. In McCarthy the dealer took the trade-in, never paid off the loan, and the old lender repossessed it and sold it, leaving the buyers with a deficiency balance on a car they no longer had. The court held the 25 day obligation is triggered by signing the contract and delivering the new car, not by the dealer’s success in finding a lender. If your trade-in loan is still open a month after the sale, you have a claim regardless of what happened to the financing on the new car.
The adverse action notice the dealer never sent
The least known part of the opinion may matter most. Because the dealership was the creditor on the contract, the court held a jury could find it was a creditor under the federal Equal Credit Opportunity Act, which requires written notice when credit is denied or terminated. Dealers routinely assume the lender handles that. When the dealer is the one that extended credit and then unwound it, the dealer owns the notice obligation, and the ECOA allows actual damages, punitive damages and attorney’s fees for the failure.
What to do if this is happening to you
Do not return the car or sign anything new until a lawyer has read your contract. Keep the retail installment contract, the conditional delivery agreement if there was one, the trade-in paperwork and payoff figure, every text and voicemail from the dealer, and the name of anyone who threatened you with arrest. Check whether your trade-in loan has been paid off; if it has not, write that date down. Then send the form below or call 832-410-8121.
Related guides
- Houston wrongful repossession lawyer
- Breach of the peace in a Texas repossession
- Car repossessed by mistake or on someone else’s lien
- How the Texas Debt Collection Act applies to consumers
- Your rights under the Texas DTPA
Practice pages: wrongful repossession, illegal debt collection.
McCarthy v. Wisch Auto Group, Inc., No. 14-24-00040-CV (Tex. App.—Houston [14th Dist.] Mar. 19, 2026). This post is general information about Texas law, not legal advice, and contacting the firm does not create an attorney-client relationship. No representation is made that the quality of legal services is greater than that of other lawyers.