Bought Car. Bank Canceled Loan Dealer Won’t Refund Down Payment.

My wife and I purchased a used car together in Pennsylvania recently. 1 week into owning the vehicle it broke down. Wife was driving it, all the lights on the dash imaginable lit up. Called the dealership told them they sold me a shitty car and they needed to come get it towed and fixed. The next day the bank calls me, it’s their welcome call. They begin to ask if I have any issues with the car like if there’s any lights on, on the dash. I tell them what happened and they offer me to cancel the loan they wouldn’t be going through with the funding. They told me they’d reach out to the dealership to let them know, but it was up to me to handle the refund for the down payment. The dealership is now clamming that since the bank canceled its the law that they take over the financing in house. I’ve never heard of that nor is it in any of the paperwork we have. I was under th impression that the sale was contingent of financing that failed so the sale is the void? Any advice would help. According to the bank it’s canceled and we don’t own the car anymore. But the dealership is refusing the refund.