Your girlfriend has serious trouble. The financing fell through because your girlfriend lied on her application; therefore, it did not fall through due to anything the dealership did. As a consequence, she is obligated to the contract. The dealership can certainly take the car back, but they may also sue her for money due to them under the contract--for example, say the total of all payments she has to make, including interest, etc., under the contract is $25k; if the car (which has started to depreciate) is now worth $19k, they could take the car back and then sue her for the other $6k. They could also likely seek to recover legal, repossession, etc. fees from her. Her only options are to take her lumps; find other financing to honor the contract; find a co-signer, so she can get the loan; or negotiate to some other mutually agreeable settlment with the dealership.