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Dealer Spot Delivery And Yo-Yo Scams

Dealer Spot Delivery And Yo-Yo Scams

Dealer car financing "fallen through?"

Whether you are buying a new car or a used car, your car buying experience may end in a repossession. If you have received a call from your salesperson after the purchasing a car, telling you that your financing has fallen through and you need to sign a new contract or return to the car lot, you may be a victim of a "spot delivery" dealer scam.

In many cases, after the consumer has brought the car home the car dealerships will tell the consumer that they have to agree to new terms, pay a higher interest rate, give a bigger down payment, or pay a larger monthly payment. These demands may come with a threat that unless the consumer agrees to the new contract they will lose their car, their down payment and any trade-in they have given. If the consumer resists, their car may be repossessed on the next day. This is known as a “spot delivery scam” or “yo-yo sale,” and it is illegal in Michigan.

Was your car repossessed by the car dealer?

 A “Yo-Yo” sale occurs when a dealer sells a car to a consumer under an installment sale contract but later demands that the consumer return the vehicle because the dealer claims that financing fell through. In some extreme cases, the dealer will reclaim the vehicle using repossession, threat of arrest or tricking the borrowers into returning the vehicle to the dealer.  When the dealer is ready, they yank the consumer back to the dealership like a "yo-yo" at the end of a string.

 Once the dealer has retaken the vehicle, the consumer is left in a vulnerable position with no car, no money for a down payment, and no trade in vehicle. The dealer takes advantage of this compromised position – one of the dealer's own making – to pressure the consumer into a new agreement.  That new agreement might include less favorable terms, a vehicle of lesser value, or requiring a cosigner. If the dealer cannot secure the terms they demand, it simply cancels the consumer's deal without returning the client's down payment or trade in.

What Is a Spot Delivery Scam?

When car dealers provide financing, they rarely finance those car loans in-house. Instead, they sell the loans to a lender or finance company that is in the business of taking monthly payments under a financing agreement. The dealer makes additional profit when sells that loan to a finance company, splitting the anticipated profits from the monthly payments with the lender. The dealer's finance manager has the job of taking credit applications and then matching car buyers with a finance company, bank or credit union that will accept payments and guarantee the most profit for the dealer. That process — loan approval — should happen before the dealer ever sells the car or has the consumer sign an installment sales contract. But some dealers ignore common sense and make a decision on a loan application before they make sure that a lender is willing to approve the car loan.

Spot deliveries usually happen when auto dealers don't understand which banks are a good fit for the buyer or become too eager to get the consumer to commit. Those car dealers will sell a car before they have an approval from the willing lender.

Credit reports are among the main contributors to spot deliveries.  If the the buyer has a poor credit report, bad credit history, or a low credit score, the dealer may not be able to find a lender willing to accept payments at a good price for the buyer. This leaves the dealer in the position of having to accept payments themself. Unless that dealer has a buy-here pay-here option, dealer financing is not an option and the dealer will refuse to do so. In those cases the dealer can either get the consumer to agree to a new contract that may cost more, or the dealer calls the consumer back to the dealership and demand return of the car. When yo-yo scams go very badly, dealers may resort to retaking the car by force or with the help of the police.  In most cases, dealers will not return any down payment or give any trade-in back.

How Do Dealers Get Cars Back After a Spot Delivery?

Car dealers have a variety of ways to get a car back after failing to find a lender. Because so many car deals go bad, dealers understand how to manipulate consumers into returning the vehicle and pressuring them into compliance.  The most common by far is to place a phone call to the buyer and ask them to come back, sometimes offering incentives like free oil changes or other services. Consumers — unaware of their rights — will often respond positively and go back to the dealership and turn over the car voluntarily. For those who resist, the finance manager may hire a repo agent to pick the car up. Finally, if the dealer is well connected, they may ask the police to get involved and threaten the consumer with prosecution for theft if they don't return the vehicle. 

Each of these tactics is abusive to the buyer. If a dealer did any of these to you, CALL TODAY FOR HELP: (888) 400-2733.

What to Do If Your Financing Falls Through

If you are able to find your own financing, then you can you simply use that financing to pay off the vehicle. In some instances, consumers can get a better loan terms directly from a bank than they could through a dealer. But if you have received a phone call telling you that your financing has fallen through and you don't have another auto loan available, you may need to prepare for a lawsuit.

Victims of a yo-yo financing scam or spot delivery should save any evidence of the transaction or the dealers attempts to yo-yo you back to the dealer. Most importantly, consumers should try to make their regularly-scheduled car payment. Many dealers will destroy the evidence of the transaction, and if you leave your purchase documents in the car, they may be gone by morning, along with the car. Preserving evidence also means saving any emails, texts or voice messages that prove the consumer's version of the car purchase. Consumers should also save any proof of their down payment or attempts to pay.  This would include cash receipts, credit card charge slips, and any voice recordings of attempts to pay.

What Kind of Attorney Can Help Me?

 Most lemon law or car warranty law firms don't handle spot delivery cases and are not equipped to give legal advice about spot deliveries. While dealerships may spot deliver a new vehicle, these cases require an attorney familiar with car dealer fraud or vehicle financing laws, not warranty issues. Lyngklip & Associates understands yo-yo financing scams like spot delivery and can help get you back on the road in a new car.

Why Don't The Authorities Stop This

The State of Michigan has known about this practice for nearly forty years. The State's Attorney General has received numerous complaints that it forwards to the Secretary of State. These authorities have written several memos and opinion letters, explaining that these practices violate consumer protection laws. But these same authorities refuse to discipline dealers due to their political connections. Consumer who need help are unlikely to find help with the DMV or any Attorney General.

These public officials most often leave consumers to find private attorneys to help them recover damages. If you have been a victim of a spot delivery or yo-yo scam, GET HELP TODAY: (248) 208-8864.

Have You Been a Spot Delivery or "Yo-Yo" Scam Victim?

If you think you have been a victim of a spot delivery or "yo-yo" scam, call us today for a free consultation.  There's no fee unless we can get a recovery for you.

Call Lyngklip & Associates today, (248) 208-8864


Lyngklip & Associates, Consumer Law Center PLC is a Michigan law firm and only litigates spot delivery cases within the state of Michigan.  If we are unable to provide you with service, we will may refer you to a law firm familiar with your state law and licensed in your state.

Our Spot Delivery Cases

McPherson v Suburban
McPherson v Suburan Ann Arbor, LLC. ED MI Case No.  20-13152.
Tyson v. Sterling Rental, ED MI Case 13-cv-13490
Tyson v Sterling Rental, ED MI Case 13-cv-13490
Parker v. Legend Motors, ED MI Case 18-cv-13717
Parker v. Legend Motors, ED MI Case 18-cv-13717
Brown v. Crestview Cadillac, Inc., ED MI Case No. 19-cv-11900
Brown v. Crestview Cadillac, Inc., ED MI Case No. 19-cv-11900

Lyngklip & Associates Fights Wrongful Repossessions

Even if you were behind on your payments or defaulted on your financing, you still have rights. Finance companies are not allowed to break into your property or use the police to help in the repossession. Call today for a free consultation, (248) 208-8864.


Lyngklip & Associates is committed to answering your questions about wrongful repossession law issues in Michigan.

We offer a free consultation and we’ll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.