Wabanaki Legal News, Spring 2012
Buying a new or used car can be a stressful process. You have to decide how much you can afford for a down payment, how much you can pay each month, and what interest rates are reasonable.
On top of all of those concerns, new and used car buyers now need to beware of yo-yo auto sales. Yo-yo auto sales typically happen to car buyers with bad or no credit, but all consumers should know some basic information in order to protect themselves.
What is a Yo-Yo Auto Sale?
A yo-yo sale generally occurs in the following way. You, the consumer, purchase a car. A few days, weeks, or months later the car dealer calls you back and says that the financing for the car “fell through.” The dealer will often say the loan fell through because of your credit or loan history. The dealer then tells you to either return the car, come to the dealership to sign paperwork for a new loan, or come to the dealership with a co-signer.
When you return to the dealership to review the “new loan” terms and agreement, it will typically have higher interest rates, monthly payments, or otherwise be less affordable. You may feel pressured into signing this new and unaffordable agreement because you think the first loan fell through because of your bad credit. This is not the case. Typically, the dealer did not get as much profit from the sale of the car as he wanted or needed. So, the dealer calls you back to make a new, more profitable arrangement for the dealership.
If you refuse to return to the dealership with the car and refuse to make the higher payments, the dealer may threaten repossession or report the vehicle “stolen.” If you do return to the dealership with the new car but refuse to pay higher payments or find a co-signer, the dealer may refuse to return your down payment, charge you high “wear and tear” fees, or may have already sold the car you traded in.
What Should You Do If You Are a Victim of a Yo-Yo Sale?
- Get all of your possessions out of the car in case the dealer repossesses it
- Gather all the paperwork from the sale of the car (including manuals, stickers on the window, materials in the glove compartment)
- Make sure you keep the temporary license plate
- Write down all conversations you have with the dealer or dealership
- Keep track of all of the dealer's excuses for wanting you to renegotiate your loan
- Keep copies of the original sales contract and the “new” sales contract
There are laws in place to protect consumers from these types of deceptive practices. Please contact Pine Tree Legal Assistance at 877-213-5630 if you think you have been a victim of a yo-yo auto sale.