Auto Financing Scams: Yo-Yo Financing Scam
Among the tricks and scams practised by the auto dealers, we can find different auto financing scams as well. Yo-Yo financing scam is one among the auto financing scams and it is the byproduct of the spot delivery process.
Spot delivery is the process in which all the cars are sold immediately before the financing is over. This means that the car dealer allows the car customer to take the car home without knowing whether the auto financing is approved or rejected. For example, if the buyer purchases the car on Saturday, he takes the car home that day and has to wait until the banks are open on Monday to approve his/her financing. Spot delivery is a very useful option for car dealers as they turn the car shoppers into actual buyers. However, the spot delivery process is a very profitable platform for the car dealers to practice the yo-yo financing scam.
As we have said, the spot delivery process is a good ground for the different auto financing scams. For example, in the case of yo-yo financing, when the car customer has taken the car home, he/she may receive a phone call from the dealer informing that the application was not admitted because of the low credit score the buyer had.
People with low credit scores are more inclined to believe in such stories. So, they come to the dealership and agree to pay higher interest rates for the vehicle. There sometimes appear people who refuse to sign a new contract and they just give the car back, but again having to pay large penalties for excessive wear and tear and so on.
In order to avoid auto financing scams and especially the yo-yo financing scam, you should do the following:
- Get you financing pre-approved in order to avoid spot delivery
- Be careful when reading and signing the paperwork
- Require to see the copy of your application for financing (either approved or rejected)
If however, you have taken the car home and have received the dreadful phone call:
- Ask to see the document or the letter stating that you financing fell through
- Go to the dealership to discuss the matter, but do not take the car with you
- One of the best options in such a situation is to turn to the auto dealer fraud lawyer who will review your case and defend your rights as a car purchaser.
Yo-yo financing scam is one of the most frequent and dangerous scams ever. Be careful when buying a car.