You go into a dealership and they set you up with car that you want. You sit down with the man in charge of finances and he gets you set up with a great deal. Everything is looking great and the dealership even lets you drive home with car even though the sale hasn’t been finalized. You get home and can’t help but smile at your good fortune. The house of cards doesn’t crumble until the next day, when the dealership calls to have you come back in. Suddenly the financing that you were offered has fallen through and now you’re being asked to sign a new deal with a higher interest rate or a much higher required down payment.
This dilemma has a name, and it’s one that has consumer groups asking the FTC to do something about it. It’s referred to as a “yo-yo scam.” The NY Times has an article on this very thing where they define the scam as where the salesperson “pulls the consumer back to the dealer, like a yo-yo on a string.”
Christopher Kukla, Center for Responsible Lending’s senior counsel for government affairs, says the the dealers will do this scam because once a consumer takes home the car, they believe the deal to be done. That means they aren’t in the market anymore, not researching for better loans at other dealerships. If the buyer refuses to the new agreement, they hit a road block on getting the down-payment back or their trade-in returned. Typically the trade-in has already been sold. The ones that are targeted by this scam are usually suffering from low incomes and bad credit.
The advocacy groups are asking that the FTC step in to put an end to this practice. They believe that it gives dealers an unfair upper hand in negotiations. The National Automobile Dealers Association has dismissed the claim however, saying that the practice is not prevalent. We here at Approved Loan Store would like to hear your thoughts on the matter. Have you ever been a victim of the yo-yo scam?
Approved Loan Store helps people with bad credit find the car they want. We are not in the business of deception, we pride ourselves on being honest with customers. Don’t take our word for it, we have over a hundred people providing testimonials on the quality of our business. Fill out the application, we would like to work with you. Like us on Facebook to see all the latest industry trends and be sure to also follow us on Twitter.