Spot Delivery or Yo Yo Financing is a very common car dealership scam designed to ripoff people with bad credit by convincing them to drive off in cars without finalizing their loans
This is a very common car dealership scam designed to ripoff people with bad credit. While you are at the car dealership you’re told that you have excellent credit and got a good APR on the loan. Then they hand you the keys to your new car, tell you the sale is subject to loan approval and you drive happily off.
A few weeks later you get a surprising phone call from the car dealership letting you know that the loan fell through because you didn’t qualify for the interest rate that you thought was guaranteed. So they ask you to come back to the auto dealership to work it out. If you fall for this scam prepare to pay a much higher interest rate and perhaps a fee if you agree to pay it.
The dealership knows exactly what interest rate you you qualify for and how large a loan you can get. They knew you had bad credit long before you drove off. They knew that even though you could get a loan the APR would be high. The reult: you would either purchase a less expensive car or decide not to get a car at all. You want the car badly…if the price is right. The salesman is well aware of this. He or she also knows your credit score and wants to make the sale any way they can. If you have bad credit and haven’t secured your own financing you are the perfect target for a Yo Yo Financing scam. This scam is also referred to as the Spot Delivery scam.
People with bad credit seldom question Yo-Yo financing scams
People with bad credit believe this kind of scam because they are often aware of the fact that they have bad cedit. The car dealership takes full advantage of this knowledge and slaps on the “subject to loan approval” clause. Yo-Yo financing scams are probably not going to work on you if you have good credit because you usually know just how good your credit score is. If you have good credit and the car dealership tries to jack your interest rate up to 18% you’re probably going to cry bloody murder and seek legal council. That why the dealership goes after people with bad credit. They probably sell you the car anyway so why bother taking the risk? The unfortunate person with bad credit could get conned into not only paying more per month but if they are that easily fooled the dealership might spring a surprise fee on them as well.
The best way to avoid a Yo-Yo financing scam is to arrange your own financing. Do it at the bank or your credit union or some other way but don’t go into the car dealership and have them arrange it for you or else you run the risk o the Yo-Yo Financing or other financing scams. You’ll also protect yourself by not driving off in the car unless you are certain the sale and interest rate on your loan is final. If someone tries to get you to drive off in the car without a guaranteed priace and APR just walk away from the deal. There are plenty of honest auto dealerships out there that you can go to and one that tries to pull a Yo-Yo scam on you is not on that list.
Anytime a car salesman asks me those magic words, “How much can you afford to pay a month?” I leave immediately. When you have your own financing arranged you don’t need to take that. You just need to know how much the car is and that’s about it. Anytime a car dealer calls you to tell you that your loan fell through you should suspect that you’ve become the victim of a scam. Don’t drive off with a new car unless you are 100% sure that everything is finalized and in writing.
What to do if you think you’ve been the victim of this scam:
If you think that you’ve been the victim of a Yo-Yo financing scam you should immediately report the car dealership to your state’s Attorney General office. You should also contact the Better Business Bureau to report a dishonest dealership. You can also try to find better financing and get a better interest rate as fast as you can. Going from 18% to 9% could mean savings of hundreds of dollars a month and save you thousands over the term of the loan.