If a retail installment contract is not approved and the deal is cancelled, what must you do with the customer's trade-in?

When a retail installment contract is not approved and the deal is cancelled, the appropriate action is to return the customer's trade-in to them. This is crucial because a trade-in is considered the property of the customer until a successful transaction is completed, including the approval of financing. Since the deal fell through, it is the customer's right to have their vehicle returned. This fosters trust and maintains a positive relationship between the dealership and the customer, which is essential for future business.

The other options, while they may address different scenarios, do not reflect the obligation to return the customer's property in the case of a cancelled deal. Keeping the trade-in, selling it at auction, or donating it would not only disregard the customer's ownership but could also lead to legal issues and a loss of credibility for the dealership.