CAR DEALERSHIP REFUSES TO CANCEL THE APPLICATION

Two months ago I wanted to buy a car through a dealership which promised to get me finance from the banks.It did secure me finance and it called me to come and get a car.When I got there the car they wanted to give me was not in a good condition so I asked them to cancel the application and they promised they will.To my suprise when I wanted to buy a car from another leadership the bank told me that it won't help me because the first application was not cancelled.When I contacted the dealership the lady I spoke to was very rude and she demanded that I pay a cancellation fee that they didn't tell me about at first.I sent them an e-mail they didn't respond.What angers me is that I am now asked to pay for something which no one told me about before.Please help.