Buying a new car is exciting. Most people think that once they sign their name on the dotted line — they can take the key and leave the dealer with everything square off. For some new car buyers, it’s much more complicated than that, because NPR emphasized in a recent story on a dealer practice is called “yo-yoing.”
Basically a yo-yo agent – The agent I worked at is called it’s puppy-dogging for some reason — when the dealer lets you know you’ve been approved and lets you sign, pay, and leave with the car before you are actually approved. You have filled out the paperwork, applied for sponsorship, paid pay up front, sign some documents and then be given the keys to leave what you believe is your new trip.
But about a week later, the agent calls you saying that you, In fact, has not been approved. Depending on the dealer, One of two things will happen: they will tell you to bring the car back and they will return your depositor they will say you need to agree to higher financial terms. Not at all the way you handle the situation is terrible – you will don’t have a car or pay significantly more than you originally agreed to.
This is what happened to Courtney and Darren Johnson in Florida. A couple are new parents and wanted a family car, so they went and bought a Hyundai SUV from Greenway HyunGreat Orlando. Three weeks after purchase, the Johnsons . family received a call from the agent’s financial manager. From NPR:
I got a phone call from the dealership’s finance manager,” said Darren Johnson. The manager told them the financing for the car had run out and that if the couple wanted to keep it, they had to go back and sign a contract with different terms.
“I was a bit confused,” Johnson said. “I think this is a legally binding contract. … We already have this vehicle at home. You mean it’s not sponsored?”
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Thinking something was afoot, the Johnsons ignored the dealer. But the dealer retaliated and sent a tow truck to repossess the SUV. The couple then tried to contact the dealer to get their vehicle back, but the dealership ignored their calls. In the NPR story, the Johnsons’ fate landed them with a year of no car, and asking friends for rides to work and appointments.
Different states have different notification timeframe requirements for dealers. In Maryland, a dealer has four days only to notify customers if they are approved or not; in Florida, I can’t pinpoint how long an agent has; in California, it’s just more than 2 weeks.
This also emphasizes the importance of reading contracts before you sign them. Most of these sales contracts say that the agent can perform this type of stunt; That sale is not final and the dealer can cancel everything if financing is not possible to be ensured. And it happens more often than you think. Lawyers from all over the country talked to NPRand of 40 lawyers they spoke to, they say they have received over 900 calls regarding this dealing strategy. In most cases, agents often end up deceiving customers, with high loan terms or lying to them about not being able to pay back client exchange.
Therefore, Why would an agent do this? Greed. Agents don’t want you to leave without buying something the day you set foot on their dealership lot. Many people will work a deal and shove financial clearance for any company that will receive it, and for them, on the dealer side, everything is done. They will receive that thing commission whether the financing for the client has been approved or not. Sometimes, it is done as a tactic to get more money from customers, hence the higher finance rate if they tell them have to bring the car home.
But the government is watching. By order of 18 state attorneys generalsFederal Trade Commission are drafting new rules to prevent this practice. Below this proposed rule changeThe FTC will prohibit “agents from misrepresenting when a transaction is final or binding on all parties and misrepresenting withholding cash payments or means of exchange, charging fees, or initiating transactions.” legal process or any action if a transaction is not completed or if the consumer does not wish to participate in a transaction.”
Not everyone believes that federal intervention is necessary though, because the dealer do transactions like this all the time without any problem. it’s honest their reputation, not the customer’s reputation, happiness, or welfare, which they need to protect. From NPR:
But Paul Metrey with the National Association of Auto Dealers says the FTC doesn’t need to change the rules at the federal level. He says the majority of auto sales happen without incident. “You have tens of millions of transactions where this happens all the time,” says Metrey, even if the sales contract gives the agent the right to cancel it later.
So he says there’s nothing wrong with contracts that give agents the right to cancel after the fact. He says he has no data on problems with yo-yo sales but to him it seems very rare that initial terms don’t work and car buyers need to be called back.
“It’s a situation you want to avoid,” he says, because if the buyer walks away, the dealer will be stuck with a car that has more miles on it making it worth less. It’s a headache for everyone involved.
“Perhaps the most significant is that you have an unhappy customer,” says Metrey. “A dealer’s reputation is key.”
The other things Unsatisfied customers leave and lose a lot morejust like the Johnsons did. Couples not only no car for a year, but They also did not get their exchanged vehicle back. Financial failure Can’t even repay the loan, so they are also stuck in paying off. They will eventually dip into their retirement savings to pay off that bill. In the end, the Johnsons had a better ending to their story. After finding an lawyers to take their case, they sued Greenway Hyundai Orlando, and won $225,000 in arbitration.
