Just when you thought it was safe to drive your new car off the lot, take it for a spin, and show it off a little bit…imagine getting a phone call from the dealership about “some financing discrepancies.”
“This is Frank from the dealership. There’s a small issue with the financing of the car…”
Next thing you know, the deal you thought you had agreed to has fallen through, and you find yourself looking at a higher interest rate, or being pressured to buy additional insurance.
What many people don’t realize is, if you take a car off the dealer’s lot before financing has been approved by the lender, you too could get that dreaded phone call. If you do, there’s a good chance you’re being set up for a yo-yo scam. Driving a car off the lot before final approval of financing arrangements is called “spot delivery,” a term which refers to the dealer placing a customer in a vehicle “on the spot” to get the sale, only to “yo-yo” the customer back in later to re-negotiate the loan agreement for additional funds. Just because you’ve negotiated the deal already doesn’t mean it has been sealed on the financial end.
Since most consumers don’t know to do anything other than what the dealer says, people fall victim to yo-yo scams every day. If it happens to you, don’t just go in and renegotiate the deal. First, find out what the options are and what, if anything, this “issue” will cost you. Then, ask the dealer for the name, telephone number and address of the lending institution that rejected the financing. Thoroughly read your agreement to see if it says anything about what happens if financing falls through. If there is no such information, contact the office of the North Carolina Attorney General, or our NC lemon law office to learn your rights in this situation.
In some cases, the dealer may have you sign a contingency clause stating that you were allowed to drive the car while awaiting approval of financing. If financing isn’t approved, the dealer can take the car back, and this may be your best option. Many times the seller or finance office will state that you must go through with the deal at a higher interest rate, or with a higher monthly payment amount. Be very careful in these situations, and contact our North Carolina lemon law office, or another consumer attorney for an explanation of your rights. Even if a dealer claims that you can’t bring the vehicle back, you may be within your rights to do so, as long as financing hasn’t gone through. Remember, if your financing was truly rejected, you have a right to speak to the lender about it.
