Erica Chua68116

Yo-Yo Financing Fraud - I Just Drove Off, Now I Have to Come Back?

Yo-yo financing fraud is a very common practice among car dealerships to rip off customers with below average credit by convincing them to drive off in cars without finalizing their loans. While you are at the car dealership, financiers will tell you that you have excellent credit and received a good interest rate on an auto loan. Then they give you the keys to your new car and tell you that the sale is final pending loan approval and off you go. A few days later, you get a phone call from the dealership letting you know that the loan fell through because you did not qualify for the interest rate you thought was set in stone. Then they ask you to return to the car dealership to workout a new loan. If you do fall for this scam, let it be known that you may be paying a higher interest rate and perhaps a fee if you agree to pay it.

The car dealership knows the interest rate that you qualify for and how large a loan you can get. They were well aware that you had bad credit before you drove off. They also knew that your interest rate would be high even if you could qualify. The final result is that you buy a less expensive car or you do not buy a car at all. Yet you want the car very badly for the right price. The salesman is cognizant of this. He already knows your credit score and wants to make a sale as best as he can. If you have below average credit and have not obtained your own financing, they view you as a target for yo-yo financing fraud. Sometimes this scam is also known as spot delivery fraud.

Customers with below average credit rarely question yo-yo financing fraud

People with below average credit are suckered into this scam because they are well aware that they have bad credit. The car dealership uses this fact and takes advantage of the customer. They will write in a subject to loan approval clause on the paperwork before you drive off. This scam will definitely not work on you if you have an excellent credit rating and you know your credit score. If your credit is good and the dealership attempts to raise your interest rate to 17%, you will probably be ready to walk out the door. For this reason, car dealerships target customers with below average credit. They probably will let go of the car anyway. There is no reason to take a risk. The unsuspecting customer with below average credit could get swindled into paying more per month. If the dealership feels that they are easily fooled, they might even tack on some extra fees as well.

The best way to circumvent a yo-yo financing scheme is to get your own financing on your new vehicle. Go to a bank or credit union, but do not go to the car dealerships financing department where you will risk becoming a victim of this scam. You will also protect yourself by not driving off in a car unless you are sure that the sale and interest rate on your auto loan are locked in. If somebody tries to give you the keys to drive off in a car without a fixed price and interest rate, then walk away from the negotiating table. There are many honest car dealerships that you can patronize.

Anytime a car salesman asks you, how much can you afford to pay a month?, run very fast. If you have secured your own financing, it is none of his business how much you can afford. All that matters to you is how much the car costs. Period. Anytime a car dealership calls you to tell you that your loan fell through, you should suspect that you have become a victim of yo-yo financing fraud. Never drive off with a new car unless you are 100% certain that everything is finalized on paper.

What to do if you believe you are a victim of this scam

If you believe you are a victim of yo-yo financing fraud, you should report the car dealership right away to your states attorney general office. You should also report your bad experience to the local Better Business Bureau. You can also try to find better financing and secure a lower interest immediately. There is nothing that says that you should pay the interest rate that the dealership has locked you into. Getting an 8% APR from a 16% APR could save you hundreds of dollars per month and thousands of dollars per year.

There are many forms of consumer fraud going on nowadays. It is up to you to educate yourself on what is or is not legitimate. Hopefully, our advice will minimize your chances of becoming a victim of yo-yo financing fraud.

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posted by ericachua15109 @ 3:08 AM 0 comments