insurance auto auction

How can a auto lender report you if they never paid the car lot in full?
I have not so good credit and 4 kids. I purchased a van from a car lot under credit acceptance. It was a 93 dodge caravan that was a piece of crap anyway. I was placed under 300 a month payment with “FULL COVERAGE” LOL insurance. The people at the lot told me and the people at credit acceptance said “The dealer doesnt get paid until you pay”. SO in my mind this was like a RENT TO OWN. I had to have the car voluntarily repo’d because it was too expensive, and not reliable. Now they have placed this in my credit report saying I owe them like 4000. How can I owe them that if they never gave the car lot the money in the first place? They also auctioned the car after I had them come and pick them up. This is unfair to me and doesnt seem like a real loan. I have disputed this already and they keep saying I owe them. Money was never truly lent on my behalf. Please help me understand what to do. Thanks
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