If you're using a pre-shared key, the password is verified during the 4-way handshake. The thing is, if your password is wrong, then the Message Authentication Code (MAC) of the messages your are sending is wrong. The AP will simply drop frames with a wrong MAC, and will not respond to them. The problem is that as a client you do not know whether the AP is not responding because (1) the MAC was wrong, and hence the password was wrong; or (2) the message did not arrive at the AP (or you did not receive the response of the AP).
tl;dr: can't tell the difference between dropped messages due to wrong authentication check (i.e. wrong password), or dropped messages due to bad connection.
tl;dr: can't tell the difference between dropped messages due to wrong authentication check (i.e. wrong password), or dropped messages due to bad connection.