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I don't subscribe to the view that all car dealers are crooked, although judging from our collection of car dealership horror stories -- of which I have a backlog to add -- I'd guess there are still quite a few out there who are. I always urge people not to vilify car dealers right off the bat... at least not until they misbehave.

Of course, sometimes you don't know your dealer has misbehaved until a few days after you drive off the lot, when they call to tell you there's a problem -- your financing fell through and you have to pay more money. This is the time-worn spot delivery scam, otherwise known as "yo-yo financing".

Unfortunately, many victims of this scam wind up giving in to the dealer's demand for more cash. Shame, because they really didn't have to. Find out all about this swindle -- how it works, what to do if a dealer tries to pull it on you, and ways to spot it before it happens -- in my latest article, The Spot Delivery Scam. -- Aaron Gold

January 23, 2012 at 12:52 pm
(1) Eric says:

This is where pre-arranged bank financing comes in so handy. I realize that there are many who don’t do that, and thus could fall victim to one of these scams. I’ve done dealer financing a couple of times in the past, and thankfully, never had anything like this happen to me.

January 23, 2012 at 1:00 pm
(2) Jon Schroeder says:

Your article reflects both your naivety as well as lack of knowledgeability.
If the additional cash is a requirement of the lender (easily verifiable) then it’s applied to the unpaid balance, not added to the sale price. Aaron, if the money goes to pay down the purchasers loan balance, how is that a scam? The dealer has no additional monetary benefit and the borrowers payments are reduced. If the financing is not a subvented rate (usually below market offered by the factory on new vehicle purchases) the purchaser can go to their own lender and simply bring a check to the dealer for the unpaid balance. You correctly point out some additional remedies, such as returning the vehicle, but in this era of financial difficulty lenders often require additional downpayment to reduce their risk. Blanket condemnation of additional cash requirements as a scam is false and misleading. I’m certain there are unscrupulous dealers that abuse there customers on any number of issues, including this one, but that is not justification for labeling the entire practice as a scam.

January 23, 2012 at 2:05 pm
(3) Aaron Gold - Cars Guide says:

It’s a scam, Jon, because the dealer generally knows what sort of financing a buyer will qualify for within minutes of doing a credit check. You haven’t cited a justifiable reason why the dealer would demand more money after the sale is completed, unless he let the car go off the lot at a finance rate that he could not fulfill (i.e. he could not get the loan bought). And if that’s the case, he should not have let the car leave the lot in the first place.

Unfortunately, Jon, this happens more frequently than you might imagine. And it’s a scam.

– Aaron

January 23, 2012 at 2:34 pm
(4) Kurt says:

Seems like Jon is trying to justify his job of trying to scam people out of money. It’s a shame.

January 23, 2012 at 2:59 pm
(5) Duncan Davidson says:

Jon is correct as a lender I frequently require more down payment to reduce risk for the bank on a credit challenged customer

January 23, 2012 at 3:00 pm
(6) Aaron Gold - Cars Guide says:

Duncan, I assume you could easily let that requirement be known before the customer agrees to a deal and drive off the lot. — Aaron

January 23, 2012 at 8:19 pm
(7) jeff says:

If the buyer has not been clearly informed of this in writing before they leave the dealership then it’s a scam.
If they are taking the chance hoping it wont happen to them then it’s their own fault for trying to purchase a vehicle they cannot afford, credit wise anyway. Too bad, so sad.

January 23, 2012 at 10:58 pm
(8) lwatcdr says:

I agree it is a scam. The simple reason is that the buyer is told that they where approved and then after the fact they come after the buyer for more money.
Really approved is approved end of statement. If it is not approved then don’t let the car off the lot.

If you think that is bad you should try buying a motorcycle.
There was a dealer advertising a bike for $7299… The out the door cost was $8900! Now this is a 2009 “new” motorcycle that has been sitting on their lot for 3 years.
That seemed really high so I did the math. Tax is $437.94, tag and title is $150 so the total comes too. 7886.94. When I asked what the extra grand was for they said “dealers fees”????? I can see not putting on the tax and title when you advertise but one and advertised price of 7200 dealers fees of over $1000 sure smells like bait and switch to me. I think that they need to pass a law that requiers the price advertised to include any “dealers fees” outside of tax or title charges.

January 23, 2012 at 11:38 pm
(9) Sean says:

The dealer is either incompetent or trying to scam you. They may have known before hand how much more, and knew you wouldnt go for it so do a spot to get you “over the curb”. I know a few that would turn around and push people with decent credit into sub-prime at a much higher rate. Dont act like they have no incentive, the back end money on that kind of deal can be huge. I knew dealerships that would sell cars below cost, and make thousands on the back end. I would return the car, take my trade back and go to another dealership that isnt such a sleazebag. Not all dealers are dishonest, but a few have absolutley no shame and will try anything.

January 29, 2012 at 7:24 pm
(10) Indiana Bob says:

This happened to me when I bought my first new car (’83 Subaru) in Louisville; they had a special 9.9% rate; after signing deal they said I didn’t qualify for rate and had to go with 13.9%. When the payment book arrived I noticed it was with the bank I dealt with. On asking the bank they said that the dealer NEVER tried to approve me for the lower rate.

Get financing approved up front.

January 31, 2012 at 9:09 am
(11) J Kyle says:

I used to work (not in sales) at a Dodge dealership that did a fair amount of “bad credit, no problem” type advertising. From what I saw, it was not terribly unusual for people to have to get “bumped” to a higher payment, but this was, as far as I could tell, done when the customer would come to pick up their new car. It always seemed a bit crummy to me, since the customer would walk past their shiny new car parked in front, so they’d be excited to get it, but then would have this one unexpected hurdle, which most would just go along with since the car was their waiting for them! Their car! It takes a lot of self-control to walk away at that point.

Of course, this was almost 20 years ago, long before today’s instant-answer capability. Anyone telling me *after* the fact that they need more money from me would get me pretty damned pissed off. Fortunately, I’m very happy with the dealership I buy from so no worries about that. :)

October 2, 2012 at 2:56 am
(12) Eddie says:

What happens if deal no good you have car should you return or keep it til refund is given title and reg in my name

March 23, 2014 at 3:11 am
(13) Benjamin_K says:

Try this one on for size, Aaron you should like this. I purchased a car from a second chance dealership since my credit was somewhat non-existant due to really just not using it. I was financed, the finance company verified many times that the car was financed, I have since made two payments to them and still have an active account online even though they are trying to block me from making payments and still fulfilling my contractual obligations. The dealership, reposed the car the day after my first payment was to be made, I scheduled payment a week earlier and payed two days before it was due. Now the dealership is trying to make claim that the financing did not go through even though I have a welcome letter from the finance company congratulating me on my approval, my first monthly payment invoice, multiple emails between the finance company and myself stating that I own the car and they are the first lien holder and further that nobody else could even be able to sell the car without my signing it over or them reposing it for non-payment.

The more I read your information here, it sounds like I am trying to be baited right into the same situation. I got my first Certified Mail from the dealership stating they are assuming the ownership of the car and going to sell it if I do not pay in full. Claiming that I have not made my payments on the truck which I have made my payments to the legal finance company that I have a Motor Vehicle Retail Installment Sales Contract with, not a Conditional Sale or Borrowed Vehicle Agreement. Everyone I have spoken with is floored by the data of facts that I have backing my case. I did not know of this Yo-Yo Financing or Spot Delivery before, but now that I am living the experience (though slightly different I must say), the information you have provided is certainly enlightening.

March 23, 2014 at 11:24 am
(14) Aaron Gold - Cars Guide says:

Glad to help, Benjamin. Time to call a lawyer.

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