Do not take a car until the loan is final
- On-site car deliveries should be approached with caution
- Dealers say yo-yo financing is scarce% 2C but consumer advocates disagree
- Getting financing quotes before buying a car can help
It might seem like a big plus: driving your new or new car to your home while a dealership works out the financing.
But that can turn out to be a bad idea.
This is because the terms of the loan agreement discussed at the dealership may change for a much higher rate after a buyer brings a car home. Unscrupulous dealers may try to bring buyers back one or more times to sign new, more expensive offers – a practice known as “yo-yo financing”.
Pushed by state attorneys general and consumer groups, the Federal Trade Commission is considering proposing new regulations to combat the practice.
The National Automobile Dealers Association said in a statement that it is important for regulators to distinguish between “fraudulent yo-yo financing” and what it calls “legitimate conditional sales or on-time deliveries.”