YOYO Financing


The car buying process can be particularly intimidating and buyers navigating the process may have numerous concerns ranging anywhere from whether they are getting good deals to whether the mechanics of the car are as represented. One added concern is whether the dealership or seller will engage in “yo-yo financing.”

What is yo-yo financing?

While yo-yo financing is not new, it seems to be increasingly popular. Yo-yo financing happens where dealers “sell” cars to buyer upon mutual agreed terms. Buyers then take possession of the car, only to be notified by the sellers at a later time that the financing was not approved and that buyers must either return the cars or sign new contracts, with commonly more unfavorable terms. These unfavorable terms may take the form of larger down payments, higher interest rates or increased sale prices. In order to get buyers to agree to the new terms, dealerships commonly employ the following tactics:

  1. Threaten to report the car stolen;
  2. Threaten to repossess the car and ruin the buyers’ credit;
  3. In the case of trade ins, incorrectly represent to buyers that the traded in vehicle has already been sold.

What can you do to prevent being a victim of yo-yo financing?

To reduce the possibility of being a victim of yo-yo financing, there are a couple of strategies that buyers may employ:

  1. Get pre-approved for financing. It may be good practice to obtain financing from trustworthy financial institutions prior to trying to buy a car. This prevents the dealership/seller from “talking” buyers into cars that they cannot afford. It will also reduce the likelihood of the dealership being able to claim that the financing was not approved.
  2.  Before agreeing to purchase from a particular dealership or seller, it may be prudent for buyers to do their research to ensure to determine the reputability of the dealer/seller. It may be prudent to do choose dealership or sellers with a good reputation and long and established business history.
  3. Read the contract and ask questions. While the contract may be long and confusing, it is a good idea for buyers to take the time to read the sales contract so that they understand the terms of the financing. Take the time to read the contract no matter how impatient or in a hurry the dealer may be. If the dealer is being unreasonable about allowing time to read the contract, then this should be a warning sign.

Buyers arming themselves with their research on the dealership or seller and pre-approved financing also shows the dealership that they may not be an easy target for any unscrupulous conduct.

What can you do if you are a victim of yo-yo financing?

  1. Keep calm and stop to think. This is perhaps the most important advice. Practiced unscrupulous sellers may say or do things to get buyers to lose their tempers. This increases that possibility that the buyers will do something that is not in their best interest. Do not rise to the bait! Stay calm and never get into a physical altercation with the seller, no matter the level of provocation.
  2. Keep detailed records and get everything in writing. This goes without saying. The more detailed or written records, the easier it is to prove that yo-yo financing has taken place.
  3. Give us a call as soon as possible. These cases commonly have a one-year time period for you to file suit.

For more information about auto repossession, please visit our website at: Automobile Repossession

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 1,800 homes from foreclosure, eliminated $100,000,000 in mortgage principal and consumer debt, and have collected millions of dollars on behalf of our clients due to bank, loan servicer, and debt collector violations, negligence and fraud. Contact us for a free consultation to see how we may be able to help you.