Beware of Spot Delivery or Yo-yo Financing Scam by Dealers
It never stops surprising us how sly some auto dealers are. They seem to ponder permanently over new ways of making additional money. Car dealers have recently enlarged the arsenal of sneaky tactics with spot delivery scam or the yo-yo financing scam. Let’s reveal how it works.
The scenario is simple. The customer chooses the vehicle he wants and fills out all the necessary paperwork including loan application. The salesperson says that though his loan hasn’t got approval yet, he can take the car home. The purpose of spot delivery scam is to make the customer believe that the car purchase deal is over. But the dealer is sure to call the buyer back later telling that his financing fell through. Then, they will try to force the buyer 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. He has signed a loan agreement giving consent to pay a higher interest rate if the financing fell through.
The bad thing is that renegotiating terms of the car purchase is legal. Even repossessing a vehicle is legal and dealers can do it whenever they aren`t happy with the negotiated terms. This also means that a customer who has traded his vehicle in cannot get it back. Advocacy groups are fighting to prohibit these dishonest practices but car dealers don`t give in.
What should customers do if the dealer tries to pull the spot delivery scam?
When the dealer asks you to return the car, go to the dealership but not in the vehicle you’ve purchased. Ask the dealer to show you a letter with the denied financing. This request could help you dispose of dealers demands. Only in case if the dealer can prove that the financing fell through you will have to bring the vehicle back.
The only way to avoid being on the spot is to get pre-approved financing before buying a car. Never take a vehicle home from dealership until you have made sure that the i`s are dotted and the t`s are crossed. If you have already signed the contract you can contact a dealer fraud lawyer to get legal advice. He will tell you whether you have a case or not.