DO NOT BE THE VICTIM OF A YO-YO SALE
What is a Yo-Yo Sale?
In a yo-yo sale or "spot delivery" the car dealer negotiates a "best deal" with you (the consumer), but makes the sale conditional on the dealer getting financing. By making the deal conditional on financing a disreputable dealer can turn your "best deal" into his "new deal."
Note that if the dealer is up-front and makes full prior disclosure of what he is doing in each step of the yo-yo transaction, there is nothing inherently dishonest about a yo-yo deal. But some less than reputable dealers may withhold financing and other vital information from you to take advantage of you. Typically, a yo-yo sales goes something like this:
1. After seeing an ad on the internet, in the paper or on tv., you attend at a dealership to shop for a vehicle;
2. The dealer qualifies you as a buyer (i.e., finds out how much you can afford to pay in monthly payments), pulls your credit, and tells you whether you qualify for financing;
3. After negotiating with the salesperson for some hours and eventually getting "approval" from the dealership's sales manager, you make your "best deal;"
4. You are referred to the dealership's finance manager who prepares the Motor Vehicle Contract of sale and a Retail Instalment Contract and Security Agreement (and other papers, but for the purposes of discussing a yo-yo sale the focus will be on these two documents) so that you can close on your "best deal;"
5. After signing the purchase documents and closing on your "best deal," you are handed the keys to your new vehicle and drive off the dealership's lot.
6. A week or two weeks or even a few months later the dealer contacts you and tells you that he was not able to get financing at the low interest rate you negotiated as part of your "best deal." Instead, he may advise you that:
i. He can get you financing for the same vehicle at a much higher interest rate;
ii. He can move you into a less expensive vehicle with the same monthly payment you negotiated as part of your "best deal," but also at a much higher interest rate.
7. If you resist the dealer's "new deal," he applies the "hammer" by advising you that you will be arrested for theft unless you return the "best deal" vehicle. You are also advised that the dealership has already sold your trade-in (or that, in any event, you will not be getting it back), and that your down-payment will be applied pay mileage you ran up on the "best deal" vehicle (charged at the IRS rate of 50 cents per mile), and that you will also have to pay other charges, such as cleaning and "vehicle restoration" charges that will consume a large part of, if not all, of your down-payment.
Thus, like a yo-yo on a string, the dealer throws you out (allows you take a delivery of a vehicle under the terms of your "best deal") and then later reels you back in (tells you that you must agree to re-write a "new deal" on his terms). In the car sales industry this is also known as "de-horsing" the consumer.
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