When I found this article from our friends at the Austin, Texas BBB, I thought of our readers. We’ve written here often about making car purchases. This is a great reminder to take your time:
Avoid Being “Yo-Yoed” Back to the Dealership after Purchasing a Car
A new car buying practice, dubbed “yo-yoing,” is being scrutinized by car buyers and consumer advocacy groups across the nation.
“Yo-yoing” happens when a consumer drives a new car off the lot, only to find out later that the auto dealer was unable to secure financing. The auto dealer then offers to sell the consumer a different car or raises the interest rate. Sometimes, the dealer simply repossesses the original car and keeps the down payment, claiming it goes towards the mileage the customer placed on the car.
Furthermore, the dealership may refuse to return the vehicle the consumer traded-in at the time of purchase, claiming it has been auctioned off or sold.
“It’s been a huge problem all over the country,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, an advocacy group in California. “You can have good credit and still get yo-yoed.”
The Center for Responsible Lending shows that one in eight car buyers making less than $40,000 have experienced a yo-yo deal. For those making less than $25,000, the incident rate rises to one in four.
Follow these tips from your Better Business Bureau to avoid being yo-yoed:
Start with trust. Research auto dealers at bbb.org to assure you are working with a reliable, trustworthy company. The BBB Business Review will provide background information and complaint statistics.
Consider financing through a bank or credit union. You don’t have to get your loan through the car dealership. Go directly to a bank or credit union and line up financing before you buy the car to avoid having to go through the dealership.
Don’t leave the dealership until financing is approved. In most cases, it doesn’t take very long for a loan to be approved. Wait until you have been given confirmation that your loan is approved before signing off on any paperwork or leaving with your new car. If you’re shopping for a car during a time banks are closed, come back on a different day to finalize your purchase.
Understand what you’re signing. Read through all paperwork and make sure you understand and agree with what you’re signing. If anything is unclear or you don’t agree with the terms of the contract, do not sign anything.