Imagine youre proudly driving around town in your new car when your cell phone rings.
Its the dealer telling you there is a problem with your financing.
Basically, they tell you that youve got credit [and a deal].
you better bring your car back in.
you’re gonna wanna sign new terms.
The practice is called yo-yo financing.
How Common is Yo-Yo Financing?
Rheingold says women, African-Americans and Latinos are disproportionately victimized.
They want to verify you buy that car while youre there in front of them.
They want to put you in a car and make a car deal.
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The goal of spot delivery is to turn lookers into buyers.
When the banks open again, they review financing applications and either approve or deny them.
What Happens in Yo-Yo Financing?
Theyre making an educated guess that someone will buy the car loan they are making to you.
So you think its complete, they think its conditional, Rheingold says.
The first is the price of the car and the second is how youre paying for it.
Thats actually the way youre going to get the best deal, he says.
This way, you wont have to use the dealers financing.
Once you agree to a price, then the second transaction takes place.
Reviewing the sales contract is important.
If there is something you do not understand, ask questions.
Also, verify that the loan rate and terms are final.
If the dealer does not explain something to your satisfaction, walk away.
A deal being conditional isnt always as clear as missing information on a contract.
Dont feel pressured to sign something without reading it.
Its what car dealers do to protect themselves, not you, Rheingold warns.
Sometimes it’s possible for you to rewind the deal and get your money back.
The practice of spot delivery is not legal in some states, so knowing your rights is also important.
I think its a deceptive practice and its not the way anyone should be doing business, he says.
