Yo-yo Financing Scam
Yo-yo financing scam, also known as spot delivery fraud, is a rather common practice among car dealerships. Here is how this scam is designed. Customers with below average credit are tricked into driving cars off without finalizing their loans. While the customer is at the car dealership, financiers tell him/her that he/she has excellent credit and received a good interest rate on an auto loan. Then the dealer gives the buyer the keys to the new car and tells him/her that they may drive away. A few days later, the buyer gets a phone call from the dealership informing him/her that the loan fell through because he/she did not qualify for the interest rate. The dealer asks the buyer to drive back to the car dealership for working out a new loan which will naturally have a higher interest rate.
People with below average credit are tricked into falling for this car scam because they are well aware that they have bad credit. So the fraudulent car dealers use this fact and take advantage of the customer. This scam will definitely not work on you if you have an excellent credit rating and know your credit score. If your credit is good and the dealership tries to raise your interest rate, you will probably be ready to walk out the door. With this in mind, car dealers target unsuspecting customers with below average credit and trick them into paying more per month. If the dealer feels that the customer is easily fooled, they might even add on some extra fees as well.
The best way to avoid yo-yo financing scam is to get financing on your own. Don’t be tempted when somebody tries to give you the keys to drive off in a car without a fixed price and interest rate.
If you believe you are a victim of yo-yo financing scam, you should report the car dealership immediately to your state’s attorney general office and to the local Better Business Bureau. For further help and advice seek auto fraud attorney’s help in your state.