My Car Financing Fell through – Spot Delivery Scam
The spot delivery scam, also called yo-yo financing, is one among many car financing scams. Actually, spot delivery is a broader term and yo-yo financing is a byproduct of it. The dealers practice this car financing scam with the car customers with low credit scores and who choose the option of financing with the dealer instead of a bank or a credit union.
The scenario of the scam is the following: when a car buyer enters the showroom and likes a car, he is offered an instant financing (without waiting for the approval), after which they can take the car home immediately, at the same day. The excited buyer agrees at once (usually, the buyers with low credit scores get animated for the offer, as they think this is the last chance to get a great deal with the miserable credit score they have).
After signing some preliminary paperwork, the buyer may even pay a considerable amount of down payment before leaving the dealership with the new vehicle.
However, this is not the end of the story yet. A few days later, the dealer calls informing the car buyer that his/her financing has not been approved. The rest of the scenario of spot delivery scam is already predictable; the car buyer has to return to the dealership either to give the car back or to sign another contract with higher interest rates.
This type of car financing scam involves a great deal of psychological impact on the buyer. Let us explain it to you. When the car buyer with a low credit score is given a chance of driving his dream car home without even finalizing the paperwork, he feels deeply regarded in heart and will never suspect he is going to be cheated by the dealer.
There is another psychological aspect here, too. The car purchaser, who has taken the new car home and has shown it to his neighbours and relatives, has already got attached to it to an extent that he will be eager to pay higher interest rates only to continue driving the vehicle.
Laws protecting consumers from the spot delivery scam vary from state to state. Most states, however, may oblige the dealership to return the down payment paid by the customer in the case when the car buyer chooses to give the vehicle back.
Tips to avoid spot delivery scam:
- Check your credit score. If it is too low, maybe you had better think for a while before deciding to buy a vehicle.
- Manage your financing before entering the dealership. Try to get money from a bank, a credit union, or at least a relative.
- Do not go out of the dealership until you have signed all the paperwork.
- Do not drive away in the new car until you have finalized the financing.
If, however, the dealer has called you informing that the financing fell through, you do not have to immediately take the car back to the dealership. You had better hire an auto dealer fraud attorney, who is well-informed about common tricks the dealers love to practice. The attorney specializing in this field will be able to remedy all your losses by protecting your rights.