Yo-Yo Financing Tactics


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Yo-yo financing is detrimental to those affected by these situations, and it occurs through a deal with the car dealership when the financing falls through even if the person was told he or she is approved at the company.

This means a contract was signed, the car was taken home, and then someone at the auto dealership contacted the owner to explain that the financing was not secured and the vehicle needs to be returned. This is also called spot delivery scams, and they may be accomplished in order to scam persons out of a down payment, some monetary upfront costs and similar problems.

The Federal Trade Commission is becoming involved in these matters due to the widespread damage these companies are causing to individual owners. Some of these businesses are requiring new owners to come back to the dealership and sign new deals or the down payment already provided could be lost on the vehicle. This type of action is not valid, and the FTC has initiated action against various auto companies engaging in these financing tactics. One manner of ensuring customers come back to resign or make a new deal is threats of criminal prosecution, being arrested by law enforcement and repossession of the car if the second deal is not taken no matter if the previous one was valid at the time.

Tactics of the Dealership

Most car dealerships are not engaged in illegal activities, but those that are attempt to gain the finances of customers in any way possible. One of these tactics is falsehoods explained about a new deal that may invalidate the previous valid and legitimate contract. Once the individual signs the paperwork, he or she could be bound by the terms. However, enforcing these in court may be nearly improbable. This is especially true once the courts have discovered that the company has been practicing illegal tactics. One of these is to change terms, another is to give erroneous information and a tactic is often used to alter financing data.

Additional illegitimate activity includes extra charges, services or amenities that were not requested or explained and providing warranties that are not necessary or invalid. Extra protection through services and products should only be added through the consent of the new owner. Any claims that these are necessary to ensure the sale of the car is completed or to secure financing are generally false. If these tactics are used with the claim that the services and products are free, this is often also not true. Added charges are placed with the payments or through other details in the contract that may be hidden.

How to Proceed

It is imperative that the person who purchased the car recognizes that the dealership is engaging in illegal and unethical business activities. Once this has been established, then the person may seek a remedy to the situation. The threats of the company are baseless and, in usual circumstances, they cannot be carried out. This means that the current contract is valid and still holds. Unfortunately, most individuals are scared or intimidated enough by these tactics that they fall for the threat and sign a new contract. It is when this happens that a lawyer should be hired immediately as the company may be attempting to steal or incur additional funds from the person.

To pursue legal action, it is usually necessary to hire a lawyer to assist with the entire situation from the beginning. This legal representative may explain what has happened and what needs to occur next. If compensation is necessary, this means litigation and taking the dealership to court. If they are not willing to settle and ensure the victim is made whole, the lawyer may pursue a strong claim against the business when there is enough evidence present. The dealership is contacted about the pending lawsuit with enough time to communicate and attempt to resolve the matter. However, the company may also have criminal charges issued for illegal activity.

Litigating against the Dealership

For the yo-yo financing tactic the company engaged in, there are typically various signs and pieces of evidence that may be requested of the business and the financing entity involved. This provided with the information the plaintiff gives in court could be enough to succeed and obtain all compensation owed. With the assistance of a lawyer, the possibility of success is greater.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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