Yo-yo Sales / Spot Deliveries
So you have bought your new or used car. You are happy with your purchase, happy with your financing, and have even been showing it off to your friends and family. But then….the phone rings. It is the dealer who sold you the car and he or she tells you that unfortunately for you…the financing was not approved, but not to worry all you have to do is come back to the dealership pay a little bit more and sign new documents with slightly different terms for your purchase to be complete. A “spot delivery” occurs when you the consumer and the dealer sign an installment contract for the sale and financing of your new vehicle and where you the consumer take delivery of the new vehicle, “on the spot,” and before the dealer has assigned the contract to a third party lender, which is often a bank or finance company. The sale becomes a “Yo yo” when the dealer contacts you and gives you reasons like “the financing was not approved” or “you’ll need a co-signer” and and attempts to change the terms of the contract you signed to either “get you approved” or have you pay off the car. In reality the dealer is trying to get a second shot at negotiating a deal that you thought was final. If you find yourself in this situation, you should not just go in and renegotiate the deal. First, find out what the options are and be aware that may be just simply a ploy to get you to give up more money and sweetening the deal for the dealer.
Re-read your copies of the contract and all other papers you signed before to see what, if anything, your agreement says will happen if the financing falls through. Don’t be afraid to ask the dealer questions like “Why do I have to bring the car back?” ; “What exactly went wrong with the financing?” ; “Who is responsible for this?” ; “Why isn’t this MY car”; and “What happens if if do not bring the car back?”. If you ask the dealer these questions, make sure to immediately after write down the dealer’s responses.
More often than not when it comes to “Yo-yo” sales something lurking in your documents of the deal that is a violation of local, state, and federal laws and regulations.
If the dealer has violated the law you do have remedies and you should talk to an attorney ASAP. Call the office for a free consultation.
What if I just want out of the deal?
Well you might be able to get out of the deal, but beware because the Dealer will often try to charge you for “use” , “mileage”, and “wear and tear” on the vehicle during the time you had it. Often these per day and\or per mile charges for use will be large and can use up or eat in to the down payment you made that should be refunded to you.
What about my trade-in?
Often this is the worst part of a “Yo-yo” sale. It is normal to trade-in a car when you buy a new one. However, when you do this you do not expect the Dealer will try to unwind the deal. Now the dealer tells you that financing did not go through and you don’t have extra money to contribute. You say you just want out of the deal and for the dealer to give you your trade-in back. The dealer tells you that they can not give you your trade-in back because they have already sold your trade-in to someone else. Now the dealer has you in a real pickle. You need a car and you are now desperate. So what do you do? You might feel pressured to sign a new contract or pay a little extra to the dealer just so that you can have the transportation that you need to work and live. In effect the dealer has you captive. When this happens you need legal representation, you need to call an attorney to assist you. State and federal laws and regulations like Truth in Lending Act (TILA) and the Fair Credit Reporting Act (FCRA) provide you with options.
If you are denied credit you have a right to know the reason.
If you get called back to the dealership because of an alleged financing problem, ask the dealer for the name, telephone number and address of the lending institution that rejected the financing and the name of someone there that you can talk to there. If the financing was actually rejected, you have a right to speak to the financing company about it. Federal law namely the Equal Credit Opportunity Act (ECOA) requires in these instances that notice to you be given as to why the loan was not approved.
Get all personal possessions out of the Vehicle!
If you get that call that your deal was not approved. Get everything out of the Vehicle INCLUDING YOUR SALE DOCUMENTS! Any document you signed when you “bought” the car may be relevant to your case, these documents may be very helpful to you and if you leave them in the glove compartment, they have a funny habit of disappearing after repossession.
Take pictures of the vehicle (the temp tag, odometer, and pictures showing the inside and outside condition of the vehicle). The Dealer may attempt to repossess the vehicle. A “Yo-yo” sale is bad enough you don’t also want to worry about recovering other personal possessions.
For more information see the Auto Finance Fraud page on our website.