Some dealers allow customers to take their new vehicle home before the loan has been finalized or fully approved by the lender. This is called "spot delivery" or "conditional financing.” Most auto loan contracts have a clause or a separate agreement that allows the dealer to renegotiate the deal if they later find that the deal you signed isn’t to the dealer’s liking. This is a good reason to consider other ways to finance a vehicle.
If you drive away before finalizing the deal, you risk having the dealership calling you later to say they can’t make the loan at the agreed-upon terms and that they can only offer a loan with higher interest rate, a longer term, a larger down payment, or a combination of those terms. This practice is called “yo-yo” financing.
Legal protections against yo-yo financing
If you’ve driven off the lot without finalizing your contract, you may have a right to keep your car and make the payments as originally agreed on, if:
- Your auto loan contract doesn’t include a clear statement that the deal was not final, or the dealer did not clearly disclose that the loan was not final.
- Your contract doesn’t include a statement that the sale was conditional on the dealer being able to find someone to buy your loan within a short duration of time
You are not required to agree to different financing and can walk away if you don’t want to accept the new deal. The dealer should also refund your downpayment. If you’re asked to return to the dealer to discuss your financing and it wasn’t clear to you that the deal wasn’t finalized, you may submit a complaint to the Federal Trade Commission (FTC) . If you worked through a Buy Here Pay Here dealer, you can submit a complaint with the CFPB.
You can also submit a complaint with your state attorney general or state consumer protection office . If you’re in the military, you should report this to your installation JAG immediately . If you need legal support, you may be able to get help from a legal aid office or volunteer attorney program.
Check and finalize everything before you leave the dealership
The best way to protect yourself from a yo-yo sale or financing is to make sure the loan and sale are final before taking the vehicle home.
Before you drive away, make sure you have:
- Checked all the information, including interest rate and loan terms, to make sure it’s what you’ve agreed to
- Finished your paperwork, including filling in all of the blanks, and the paperwork is signed by you and the dealer
- Received a copy of everything you signed
Understand how to close the deal
Learn how to drive off the lot with confidence, including knowing what to watch for both before you leave the dealership and possible red flags after you’ve left.
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