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My Auto Financing Was Rejected but the Dealer Didn’t Return My Trade-In: What Do I Do?

Have you had the experience of trading your car in for another vehicle, completing paperwork and driving home with your new car, only to be told by the dealer later that the financing had fallen through? Did the dealer also refuse to return your trade-in?

If so, you may have fallen prey to what has become an increasingly common practice at unscrupulous auto dealers: the “yo-yo” scam. Yo-yo scams are a form of conditional lending wherein auto dealers falsely represent that consumers have already been approved for financing under certain terms when, in fact, they have not and then attempt to sell the vehicle under less favorable terms.

The scenario described above could well be one version of a yo-yo scam. The dealer, for example, may continue attempting to sell you the vehicle, which is already in your possession, under less favorable terms. Say, also for example, that you change your mind because of the new terms and ask to unwind the deal but the dealer refuses. In that case, the dealer would be in possession of your trade-in and you would be in possession of a car that is not properly financed, such that you would not be able to properly title, register, and insure it. Sometimes, unscrupulous dealers in such a scenario have already sold your trade-in and lie about it as they continue to press you with unfavorable financing proposals.

Fortunately, you do not cease to possess rights in such a situation. Yo-yo scams rely on spot delivery (taking possession of a vehicle immediately after agreeing to a deal) and, while spot delivery is not illegal in itself, misrepresenting the financial terms of a deal (as in a yo-yo scam) is. In such a scenario, it is likely that the dealer could reasonably be charged with multiple legal claims.

So, what should you do if you find yourself in what appears to be a yo-yo scam and unable to regain possession of your trade-in? Firstly, as always, retain as many records regarding the transaction as possible. Secondly, if you are unable to resolve the situation to your full satisfaction, consider contacting an attorney, such as those at Bell Law and requesting a free consultation to explore your legal options.

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