Don’t get yo-yo’ed by your car dealer!

Yo-yo car deals are where dealer gives you a great contract for your car, even one they know is too good to be true, but then.calls you saying they couldn’t get financing on that contract and have to have you come back to get a new one (typically with much higher terms.).

Real sleazes also then say the new contract can’t give you as much credit as before for your trade in, so you have a higher price to pay for your new or used car. The coup de grâce is then they say your trade in has already been auctioned and they can’t return it, and all they can do is give you a small refund for it.

Just beware out there when buying a car and read the fine print of that contract- it may say something about how the dealer can cancel it if they can’t get financing at the same terms they offer and you will either have to get a new one or return the vehicle and even owe them a fee for using it.

One used car dealer tried that on me when I bought my 4Runner, telling me about how they had to get financing approved for it, but I had already been prequalified for a much smaller fee loan and paid it off before their contract was cancelled.

NPR posted a story about this today and how the states and the FTC are finally cracking down on the practice due to all the fraud happening with them:
https://www.npr.org/2023/02/04/1152932192/yo-yo-car-sales

 

Why would you let them take your truck before being in possession of the new truck?

 

You’re missing the point, you’re not really in possession, because they can cancel the sales contract after you drive the new car off the lot. That’s the yo-yo part.

Then as what happened to some people, if you refuse to bring the new car back to them and sign a new contract, they’ll repossess it.

 

That doesn't sound legal.

 

Nice! Makes me think of Chevy Chase in National Lampoon's Vacation where they crush his car. A classic scene!!!

 

It’s written in the contract people have been signing that they can do that. Some states have laws against it, but it is happening in some states and people need to be aware of it.

 

That was hilarious!

I just posted this because there’s so many young guys buying their first new used trucks and post about it here and I wonder how many have had something like this happen to them- at least where they were called back and had to rewrite their contract with more fees.
I bet there are a few out there.

 

r/askcarsales over on reddit has dozens of posts about this very thing happening to people. Things get even more complicated when there was a trade in involved and the dealer no longer has their old car. It puts people in a bad position because they are forced to either pay more, or return the car and now be car-less.

 

I have never had a dealer cancel a contract. Maybe I look like the kind of guy that would go somewhere else and buy something else.

I always trade titles and keys when it is a done deal. If that is not good enough for the dealer than I will go somewhere else and buy something else.

 

Not defending the dealer, but if you don’t go in pre-approved for financing you’re not doing your research. Furthermore if you can’t get approved you shouldn’t be financing a vehicle in the first place.

Most banks will finance 100-120% of invoice (new) or 125% of book value ++. If you’re over advanced that tells you that you’re paying too much.

 

I had the great misfortune of having to go to a Toyota dealership for parts. There were a dozen sales zombies waiting on the lot all mumbling "wwaallettsss, must have wallets. There are so many resources available to car buyers today it seems a shame that anyone would be captured by one of those zombies.

 

Good PSA, @OnHartung'sRoad.

 

I wouldn't sign a contract that has a clause letting the dealer rewrite the contract after it's signed. Anybody who would should expect to get screwed over. If there was a local dealer who EVER had a clause like that, they would never see me near their dealership. Criminal!!!

 

Thanks! I recall a similar story from a friend in the early 70's. So similar shenanigans have been going on a while.

I'll add this to my list reasons to stay a cash buyer! Right under the 'financing a depreciating item makes you a two time loser'.

I almost never buy new (3 out of 50ish)

I have never traded a vehicle in.

If I were to finance, it would not be through the dealer. Before all the 0% guys pile on, there is no such thing as free money. You are paying more for the vehicle to make up for the low interest rate offering.

Just remember there are 3 shells and 2 peas. And the only way to find a pea is by taking the dealers shells off the table.

 

A lot of people can’t get regular financing. In my case before, it was going to take couple days to get a check from my credit union, but I knew I could turn it around quickly. The other thing was that dealer was willing to negotiate a better price, probably because they thought I was financing it through them for the long term. I just made sure there were no prepayment penalties before signing the contract.

 

That has to be one of the worst ways to go about purchasing a vehicle.

If a person is in such a pinch and "absolutely has to have" a new vehicle that they cannot go about purchasing without this silly process, they are probably unreasonably impatient and no financial advise will be listened to.

My take here, and advise. A buyer needs to own the narrative all the way to the end.

1. If said vehicle is not on a lot for me to see and touch before signing anything, it is not the vehicle for me. I will continue to wait for or find a different vehicle.

2. Sell the potential trade in privately, or give it away. If it's a good clean used car it will sell privately for better than a dealer will give. If it's a shit box, just give it away. Dealers buy/sell cars everyday and they will ALWAYS find a way to screw you on this transaction. Be patient, and do it right.

3. Always get financing pre approved, preferably with a quality credit union.

4. Negotiate the OTD (out the door) price and stick to it all the way through till you get past the Finance Manager. Do not cave in on any further add ons, taxes, fees, blah, blah, blah. Refer back to the agreed OTD price and make them whittle away at their profits to squeeze in any new fees, taxes or other blah, blah, blah additions.

 

you’re right about trade-ins, if you’re willing to deal with some odd balls and low balls trying to buy your car, selling it yourself is definitely a lot better. I also bring a cash buyer with me to my bank and deposit the money in front of them and the teller. They use a machine that will count it and check it as it’s being collected. If the buyer is not willing to come with me to my bank, then forget it.

 

This happened to me in 2009
I purchased a 2005 Lexus GX 470 from a Lexus dealership at an amazing price. I remember it being around $20k. Gas prices were high and recession combined.
Gave them about $4k downpayment and hashed out the interest rate and payments.
A week later they call me back and say sorry we couldn’t get you the payments and rates can you come back in. The banks were getting hammered by the recession. I was confused but then got pissed !!!! I told them sorry but I am on a family vacation road trip. They asked me to bring the car back immediately to which I said see you in 2 weeks.
I did go back within a week of their call and honestly they were very apologetic. The new interest rates were higher than a giraffes ass and they highly recommended I don’t do it. They said the banks were hemorrhaging money from home loans collapsing. They returned my down payment and gave me a free $250 gas gift card for my troubles.
Now a days I just get my loans from my credit union before car shopping.

 

As Clearwater Bill mentioned paying cash is perfectly fine. However, as long you don't mention that up front or until you are sitting with the finance manager ready to pay. Then you can shock them with you wad of cash.

Working the dealer for your OTD price as if you were financing through them generally has them thinking they will make money off the long term loan, regardless of any interest rate above 0%.

Once you are satisfied with an agreed upon OTD price (without any finance numbers involved), you can move on to the Finance Manager and finish up the sale however you like. Pay cash, finance through them, finance through a credit union, etc. If you have cash in the bank, just pay off the vehicle loan the next month.

 

Smart!