Spot Delivery or Yo-Yo Financing Scam

spot delivery scam

For the first-time car shoppers and those who don’t often face with the cunning salesperson, it’s very easy to get taken. One of the most popular tricks among car dealers is so-called yo-yo financing, or spot delivery scam.

Spot delivery or yo-yo financing scam is often reported to law enforcement departments across the U.S. This is how this scam works. A few days after you brought your new vehicle home from the dealership you receive a call from the dealer. He tells you that there are some problems with your documents. It turns out that your credit is not as good as it should be. So you can’t get your vehicle financed at the rate the dealer has offered. Then the dealer tells you to come in right away and sign another contract. It will be with higher interest rate, bigger down payment or extended payments.

This scam is usually practiced upon inexperienced buyers and those with bad credit history.

In such instances when you want the dealership to arrange your auto loan you will be provided with greeting smiles, assuring promises and of course doubtful paperwork.

Cunning dealers “like” customers with bad credit scores, as they will first tell you that credit score and APR are great and you can take the vehicle home. But do not be so happy yet. They  will  call you back to the dealership in a few days. They will tell that the “financing fell through” and you can’t qualify for the loan due to your bad credit. This is the classical scenario for yo-yo financing. But it’s not the end of the story. When you arrive at the dealership they will tell you  to choose either another car or the one you took home but this time with a higher interest rate.

The purpose of spot delivery scam is to make the car shopper believe that the deal was finalized. Later they call  him back to tell that his financing fell through and force to sign another agreement with higher interest rates and fees. It means that the customer will end up paying thousands of dollars more than he expected. He can’t cancel the deal as he has signed a loan agreement which included a “write of rescission” giving his consent to pay a higher interest rate if the financing fell through.

You should take into considerations psychological aspect too. A newly-fledged car owner, who has already shown his new vehicle to neighbors and relatives, has already got attached to it. Thus  he will be eager to pay higher interest rates only to continue driving it.

If you suspect you fell a victim to car dealer fraud contact The Margarian Law Firm  at 818.553.1000 to know your legal rights.