Ever heard of a yo-yo scam? How about a spot-delivery scam?
You could be caught up in these if you’re in the market for another vehicle. Here’s how a spot-delivery scam works: When you’re shopping for another vehicle, the deal is put together on the “spot” with a car already on a dealer’s lot. If you have less-than-excellent credit or a low income, the auto dealer will suggest you finance the vehicle through the dealership. You sign the papers, thinking all is well, accept the keys and drive off in your new wheels.
At some point thereafter (days, weeks, months), you’ll be called back to the dealership after being told that the deal isn’t finalized. The “deal” in question is the purchase of your contract from the dealership by a third party. This third party buyer might insist on more money down or maybe having a co-signer. If no one purchases your contract to the dealer’s satisfaction, the dealer will cancel the contract with you.
Meanwhile, in the yo-yo portion of the scam, you’ll be allowed to drive your new car away, but — like a yo-yo and its string — you’ll be pulled back in and told you have to sign a new financing agreement — one with higher interest.
You might be threatened with fees for use of the car or even police intervention for auto theft. The Federal Trade Commission did a study of those who’d had a car-buying experience in the previous 12 months and found that buyers most likely to be targeted for the yo-yo scam are those with poor or no credit or with low income. Victims of the yo-yo scam had a hard time getting back their down payment or even their trade-in vehicle. A majority of consumers caught in a yo-yo scam caved in and signed a second contract for the same vehicle at a higher rate of interest. Before you buy a vehicle, read about yo-yo scams on the Federal Trade Commission site, ftc.gov.
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