SANTA ROSA (CBS 5) — When you buy a car, you think it’s yours to keep. But a certain form of financing may lead to a call from the dealer asking for a higher payment or to bring the car back.

For Mia D’Roso, a recent car purchase turned into a big headache. With an excellent credit score, she went to a Santa Rosa dealership prepared with paperwork from her credit union offering a 3.24 percent interest rate. The dealership offered to match the interest rate, and D’Roso financed with the dealer instead.

But nearly three weeks after bringing the car home, she received a call from the finance officer.

“They wanted more interest,” D’Roso said.

The finance officer told her the loan fell through and she had to put money down or pay at a higher rate.

But that call came 21 days after she signed her contract, even though it clearly stated the “dealer’s right to cancel that contract must include written notification within 10 days.”

It’s called spot delivery, which can lead to a predatory practice called “Yo-Yo financing.”

Before buying a car, experts recommend you educate your self at websites such as and consider getting a loan from your credit union or bank instead of financing directly with the dealer.

The dealer featured in CBS 5’s story did not return our request for comment, but National Automobile Dealers Association (NADA) provided these statements in regards to Yo-Yo financing.

“Dealer-assisted financing is a valuable service for car buyers. It is misleading and irresponsible to characterize dealer compensation for assisting in auto financing as anything other than a legitimate business practice. In dealer-assisted financing transactions, dealers typically retain a portion of the APR as compensation for performing essential retail functions to recoup their costs, just like banks and credit unions.”

“It’s important to distinguish between fraudulent yo-yo financing and legitimate conditional sales or spot deliveries. Yo-yo financing is fraudulent and illegal in all 50 states. There are millions of auto sales transactions each month, almost all of which are conditional sales pending loan approval. Tens of millions of conditional deliveries occur nationwide each year without any hint of problems for consumers.”

“Dealer-assisted financing is always optional. It’s in the dealer’s interest to have a satisfied customer, someone who will become a customer for life.”

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)


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