Most consumers believe that their business with a car dealer is over when the they drive off the car lot. But some will receive a call from the dealer telling them that their "financing has fallen through." If you have received that call, you may be a victim of "spot delivery" or a "yo-yo" sale.
Can a dealer repossess a car before your first payment?
Car buyers believe that their car can only be repossessed if they miss one of their regular car payments. Most don't known that car dealers regularly repossess cars even though the consumer has no missed payments or and has not defaulted.
Typically, the dealership will tell the consumer that their financing has fallen through. Then the finance manager will prepare a new installment sales contract, at a higher interest rate, larger monthly payment or other changes to the loan terms. This new contract may also require the swapping of a used car for the new car that was contracted or require a different lender for the credit application.
Spot Delivery and Yo-Yo Scams
When a dealership can't make enough money on a sale, it will stop at nothing to repossess the car so they can resell it and make their money. This may mean that a repossession agent will appear at the buyers home, even if the first car payment isn't due yet. This scam has been common over the years and is known as “spot delivery” or “yo-yo financing" scam” and is illegal under most state laws.
Where Your Loan Went
After selling a car, the dealer will sell the finance contract to a bank or finance company that they work with. The consumers then make their regular payment to that creditor instead of the car dealer. In a spot delivery scam, the dealer has to keep the auto loan, because no finance company is willing to buy consumer's finance contract and take payments under those loan terms. This usually happens because the dealer has already approved the consumer's loan application, sold the car, and set the terms of the car loan without consulting the bank beforehand.
Victims of the Scam
People with good credit or who can provide their own financing will typically avoid spot delivery frauds. On the other hand, consumers with bad credit must rely on car dealers to find a willing lender for their car purchase. For borrowers who can't find a cosigner or other ways to guarantee financing, dealers have a harder time finding willing lender and often commit to a car loan before being sure of the loan.
How to Avoid Being "yo-Yo'ed" Back
Car buyers in a difficult financial situation may find it easier to get their own financing from a local bank or credit union, especially if the consumer maintains a bank account or credit card with that institution. Most banks and credit unions who have experience and deposit accounts with that consumer, will be in a better position to help with financing. The consumer's established track record with that lender, provides a strong basis for granting credit.
Is there anything I should avoid at the car dealer?
A number of financial products will greatly increase the price of the car without adding any value that a lender that can help assure them of that they will be repaid. add ons like
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credit insurance
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gap insurance
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warranties and service contracts
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window etching
All of these products cost a fraction of the price paid by consumers and offer no value in the event of a default. In short, they make the car cost more but don't increase its value. The addition of these products make car deals more risky for lenders, and therefore more likely to result in a spot delivery.
Additionally, if a dealer asks you to sign a disclaimer, walk out. Any deal that prepares a form saying that your contract is conditional on finding a lender is telling you they that spot delivers cars regularly enough that they need a form to address the problem. Walk out before you sign anything.
Will a spot delivery hurt my credit report?
No. If a car dealer has told you that your car financing fell through, it means that no lender has agreed to purchase your loan. In short, except for “buy here, pay here” dealers, only banks and finance companies report to the credit bureaus. This means that car loan will not impact the trade lines of your credit report. While the inquiry from the card dealer may impact your credit score slightly, that impact lasts a relatively short time and won't impact the score any more than if you had not had the car stolen by the dealer.
What can a spot delivery attorney do to help?
Many consumers who face spot deliveries or yo-yo scams won't know where to go for help. They may try seeking legal advice from a bankruptcy attorney or the Attorney General's office. Neither of these routes will likely result in the return of a down payment, trade in or compensation. A private attorney consumer protection attorney sue the car dealer and get you compensation for dealership's scam.
Lyngklip & Associates Knows How to Stop Spot Delivery and Yo-Yo Scams
Lyngklip & Associates has represented victims of spot delivery and yo-yo scams for over 20 years. We have helped consumers whose vehicles have been wrongfully repossessed by car dealer whose financing "fell through," even though,
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the saleperson and finance manager said their loan application was approved;
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the dealer delivered a new car along with the title and registration;
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the deal was complete, with signed contracts and financing agreements,
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their payments not being due yet.
If your car was wrongfully repossessed by a car dealer who claimed that the financing fell through, Lyngklip & Associates can help you get compensation, the return of your personal belongings, the cost of replacement transportation, and compensation for the loss of their vehicle.
Our Michigan attorneys have earned a reputation for service and excellence from our clients and peers and are among the most respected consumer attorneys in the country. We bring the best available information, skills and technology to help spot delivery and wrongful repossession victims get compensation from the car dealers that took their vehicle
The Other Side Pays Your Fees
If you have been the victim of a Car Dealer Spot Delivery or a Police Assisted Repossession, help is here. We won't charge you any up front fees for consultation, and if we file a lawsuit for you, your fees are paid by the other side. There is no charge for a consultation.
CONTACT LYNGKLIP & ASSOCIATES FOR A FREE PHONE OR ZOOM CONSULTATION
There's no need to fight car dealers by yourself. Get the representation of Michigan's wrongful repossession law firm. Make a phone call today,
CALL NOW -- (248) 208-8864
More Information
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Read the Edmunds article on spot delivery: Don't Fall Prey to Spot Delivery Scams and Yo-Yo Financing
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Read the Real Car Tips article on spot delivery: What to do if Your Financing Falls Through?
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Read the top Quora article on someone's spot delivery experience: Quora.
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Read the Credit.Com article on spot delivery: Can a Bank Revoke a Loan on a Car After I Signed the Contract?