Yo-Yo Financing or Spot Delivery Scam

Intended to buy a car and have a low credit score? Beware not to be a victim of Yo-Yo financing. This common auto dealer scam works simply; roguish auto dealers are waiting for car customers with bad credit.

In such instances when you turn to the dealership to finance you auto loan you will be provided with greeting smiles, assuring promises and of course doubtful paperwork. Fraudulent dealers “like” customers with bad credit scores, as they will first tell you to have a great credit score and APR and will even let you take the car home. But do not be so happy yet; you are sure to be called back to the dealership to be informed you didn’t qualify for the loan because of your bad credit. This is the classical scenario for Yo-Yo financing. The story doesn’t end here. When you arrive at the dealer’s store you will be told to choose either another vehicle or the one you took home but this time with an extraordinarily high-interest rate, for example, 16%-19% (instead of 8%).

In the case of Yo-Yo financing, the dealer knows exactly what interest rate you qualify for and how large a loan you can get. This is a fact which helps the dealer cheat you. They know you need the car badly and so they try to make the sale anyway they can.

Yo-Yo financing is also called “spot delivery,” since it means you can take delivery of your new car on the spot, even if the dealer tells you the financing wasn’t yet approved. And really, usually a note like “subject to loan approval” is written on the paperwork to make it look more trustful later.

Now, what to do in order not to be a victim of Yo-Yo financing?

  • In order to circumvent a Yo-Yo financing, arrange your financing yourself. Turn to a bank or a credit union for financing.
  • Do not drive home a car you do not yet own i.e. if you are not yet sure the paperwork is finalized, do not take the car home.
  • If the salesman asks you “How much can you afford to pay a month?”, leave immediately. Of course, there IS an amount you can afford but you should not reveal it unless you see the car price.
  • If you think you are a victim of Yo-Yo financing, turn to a good car dealer fraud attorney.

There are many ways of consumer fraud going on nowadays. But it is up to you to educate yourself to be able to protect your rights. Then, you will minimize your chances to be a victim of any kind of fraud.