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.
To check
the reliability of a company and find trustworthy businesses, visit bbb.org.