Accessible Attorneys Offering Personalized Legal Services

Accessible Attorneys Offering Personalized Legal Services

When a car loan falls through, was it on purpose?

On Behalf of | Feb 16, 2021 | Dealership Scams |

The story usually runs something like this: You purchased your car with financing going through the dealership. You drive off the lot with your new car amidst handshakes and smiles all around. A couple days or weeks later, however, you receive a letter from the dealership indicating that your loan was not approved and that you need to return the vehicle to the lot. The dealership may tell you that it wants to charge you a per-day and per-mile fee for your use of the vehicle.  

This can be a devastating and confusing situation for a buyer. It can also be an elaborate scam intended to make you pay a lot more than you intended originally. 

The Spot Delivery Scam

According to Auto Cheat Sheet, the situation described above is commonly used as a way to take advantage of auto buyers. In many cases, that technique is used as a scam called the spot delivery scam or the yo-yo scam. 

Most yo-yo scams look something like this: 

  • The exchange happens in later evening or weekend hours when traditional lenders are not open. 
  • The dealer has the buyer sign all the paperwork and take possession of the car. 
  • The dealer assures the buyer that the lender will approve the loan, and everything will work out as expected. 
  • The dealership does not tell the buyer that it is actually the original “Seller/Creditor” and it actually approved the buyer’s loan. 
  • Within a few weeks, the buyer receives notice that the lender did not approve the loan and the buyer needs to return the vehicle to the dealer immediately. 
  • The dealer then offers the same vehicle at a higher price, higher downpayment, or a higher interest rate. 

Many dealers use this spot delivery method for selling cars. It is common practice in Colorado and throughout the country. In some cases, they are not trying to defraud the buyer. The benefit for the dealer is that the buyer signs all the paperwork and agrees to a sale right on the spot, rather than continuing the search at other dealerships. 

What should you do if you must return your car after the purchase?

Although not all spot deliveries are intentionally deceptive, the practice seems to lend itself to bad results for buyers. You need to be cautious in the marketplace when purchasing a vehicle. 

If you have purchased a car only to find out that your loan was not approved, the best thing you can do is talk to a lawyer as soon as possible to make sure your rights are protected.