The Sneaky Way Car Dealerships Can Take Back Your Recently Purchased Vehicle
Car dealerships nationwide are increasingly using yo-yo sales tactics to lead individuals to believe they have secured financing for their new vehicles, only to call the customers back weeks after to inform them that the financing has fallen through.
Some car dealerships are resorting to shady sales methods as demand continues to drop. One of the most notorious tactics is called the yo-yo sale. Prevalent among new and used car dealers, the effects can be devastating to unsuspecting customers who are left financially and emotionally distraught. The ordeal begins days after a purchase when the dealer calls to say there’s been a financing problem.
Contrary to what most people believe, car dealerships do not finance purchases themselves. They only offer contractual financing terms which are later sold to a third party. If that deal falls through, the seller calls back the buyer to renegotiate the sale at a higher cost. According to NPR, this happens regularly around the country with some folks losing their cars or even being arrested.
When Courtney Johnson purchased a used Hyundai SUV from a local car dealership, the Florida resident felt like she made a good decision as a mother. Along with her husband Darren, she decided a newer, safer car for their growing family would be ideal. “It had the backup camera as well as passenger and kid’s airbags in the back,” she told the publication.
But three weeks after they purchased and took their car home, they got yo-yoed. “I received a phone call from the finance manager of the car dealership,” Darren Johnson explained. The manager told the couple their vehicle financing fell through. And if the couple wanted to keep the SUV, they had to go back to the auto lot and sign a new contract with different terms.
“I was kind of confused,” Johnson told NPR, as he thought the initial contract was legally binding. But in most of these cases, the signed paperwork includes legal jargon saying the sale may not really be final. It often asserts that if car dealerships have trouble with the financing after the sale, they can cancel the deal, and the buyer you to agree to different terms. Alternatively, it can take the car back.
In the Johnsons’ case, the car dealership increased the price of the vehicle, paid less for their trade-in unit, and removed the insurance policy from the first contract. The couple signed the new contract because they wanted to keep the car. But a week after the first yo-yo incident, the dealership told them they had to sign yet another new contract.
“At that point, it just all seemed really fishy,” Darren told NPR. When the couple refused to sign a new contract, the car dealership repossessed the car. To make matters worse, the Greenway Hyundai Orlando dealer had already sold their trade-in vehicle and didn’t give it back. “We both were just kind of like mind blown at the entire situation,” Courtney said.
Sadly, what happened to the Johnsons is not just a bizarre one-off situation. According to John Van Alst, an attorney with the nonprofit National Consumer Law Center, car dealerships want people to feel bound by the contract. But they want to be able to walk away. Many dealers want customers to buy a car immediately to prevent them from shopping around.
