Imagine driving off with a brand new set of wheels, dealership in the rear view mirror. Then to your dismay, you discover your financing has fallen through days or weeks later.

This situation is known as a “yo yo” car deal. It occurs when dealerships give customers the impression that their auto financing is set and they can take the car home. In reality, though, the financing paperwork hasn’t been completed, putting the driver’s ownership and payment terms at stake.

Protections against shady financing trends are lacking in some areas, leaving it up to consumers to shop wisely and avoid falling prey to this practice.

What Is a Yo Yo Auto Loan – a.k.a. Spot Delivery?

Even reliable car dealers like to close sales ASAP. But some dealerships will pressure folks into accepting a deal with insufficient paperwork, letting them drive off in a new car before financing is secured. In most cases, the consumer believes the deal has been sealed. But the dealer may choose to cancel the sale or attempt to renegotiate after the fact.

This situation is referred to as a “yo yo” car deal, sometimes also called a spot delivery. The driver may get stuck with worse conditions than they thought, or they might lose the car altogether.

4 Ways to Avoid Yo Yo Auto Financing

Fortunately, there are several steps that will help protect you during your search. Before visiting any dealerships, check out Bankrate’s advice on how to avoid getting misled by this type of deal while car shopping.

  1. Don’t agree to an auto loan until you are ready. When you’re both eager and in need of a vehicle of your own, your patience may start to wane. But how you finance it will have lasting effects. One way to sidestep this conundrum is to line up financing to pay for it in advance. That will give you time to review every detail without the pressure of a salesperson.
  2. Read – and understand – the fine print. When it comes to financing contracts, the devil is in the details. Be sure you understand any conditions and what they mean for you. A second pair of eyes by someone familiar with legal contracts can help in this area. Make a list of questions of any rates or terms you don’t fully understand, and don’t make a purchase until you are satisfied you have a full picture of the financing terms.
  3. Refuse to accept excessive or unnecessary charges. Look for any additional charges added to the final loan amount. Some buyers don’t realize these can result in higher payments. Also, be sure to get a complete copy of the final paperwork before signing anything.
  4. Walk away from anything that raises suspicions. View the car shopping experience as an education. It’s best to be prepared mentally to walk away before even entering a dealership, if necessary, and for any reason. Take your time and learn from each discussion and test drive.

By the time you make a purchase you will be a pro at asking the right questions and possibly negotiating terms to get a better deal.

Check Your Local Laws for Protections

Before passing a law to protect consumers against unscrupulous car sales, the state of Maryland had received many complaints from unsuspecting drivers caught off guard by yo-yo deals. Now dealers in that state have four days to cancel a sale until it becomes final. They are also banned from selling trade-in vehicles until the sale is final.

What kind of consumer protections are in your state? A little online research will give you an idea about what questions to ask at the dealership and other potential red flags to avoid.

Have a New Car? Visit Nearby CFSC Auto Services for Licensing & Registration!

Once you’re past the final hurdle and have your new car – congratulations! There are still a few steps to take care of before legally driving it. CFSC Auto Services helps drivers access a variety of auto-related needs:

  1. Vehicle registration
  2. License plate renewals
  3. License plate transfers
  4. Replacing lost or stolen stickers

When you stop by your nearest CFSC location, we can assist with a range of auto services as well as help out with day-to-day financial services. Our flexible schedule makes it easy to come by at your convenience. Check out CFSC Auto Services online to find out more!