Andriy writes:

It seems as I’m falling a victim to a Yo-Yo Car Financing | Spot Delivery Scam from a car dealer…

I purchased a new Toyota (scion) vehicle at a dealership exactly 2 weeks ago. I drove away. The total price was $20600 – I left a $500 down-payment. 13% APR in my contract. $470 payments for 60 months. Finance manager pressured me into purchasing GAP and extended warranty (around $2100 total) saying that banks would likely grant me a loan if I show them I’m serious about investment. Well, my credit is sub-prime (620 FICO) with few accts that are almost falling off and 2 recent ones for a few hundred bucks. But I still smelled something fishy though…

To make a long story short – last Friday, finance manager called me and told me he wasn’t able to obtain financing through 5 banks. I told him I had a blank check from Capital One, that I’d be willing to use after verification process – so I’m working on that now. He said that’s fine. But he also asked if I could put more money down, to which I said “NO”, explaining that my rent and other monthly expenses need to be covered. I’m in the process of repaying debts to my friends, so I’m not able to put more money right now.

My question is – what happens if Capital One doesn’t finance? Am I correct believing that I’d have to return the car back to the dealer? Will they refund my $500 down payment? What about car not being new anymore and having 1300 miles. I heard about dealers asking to bring car back before – but not sure how the process goes. I have that long contract on my hands with APR and payments, etc. – and it says Toyota Motor Finance. I actually don’t mind bringing car back to punish them *they knew what my credit was like*, I’m just worried about down-payment. I think they’ll try to pressure me into higher APR / payment situation. Do you know what the proper course of action is?

That sucks and they’re totally tying to scam you. Check out this site for more info. Honestly, your best bet is to take the car back and get your deposit back. Sorry boys, guess the deal didn’t work out. If they say no, tell em it’s either one of two ways: either one, you, Andriy, own the car and will pay the financing based on the terms offered, or 2, Andriy doesn’t own the car and so here it is, thanks for the free ride, give me my money back or I’ll sue you in small claims court. You should go for returning the car, as those financing terms are a disgusting ripoff.

Great advice,

Thanks Ben. I just spoke to a friend’s brother (who was a Toyota selling guy for 10 years) and he told me that I was scammed and that I should a) do what you suggested + cancel my gap and extended warranty.
The only thing I’m not clear about is the deposit – actually it’s not big by any means (but 500 is 500) and I did put 1200 miles in 2 weeks – so I’m wondering whether they’ll try to charge me. I actually realize that it doesn’t make sense to them to take the car back, since it’s not officially new.
I’ll keep you posted. Have a great holiday season!
My only concern left is whether: A) I should arrange my own financing (possibly with higher APR) – I really don’t want that and I think I could live without a car for few weeks till I get something else.

-Andriy

Well like I said, either you own it, or they own it. So they have to take it back. If they try to snake your deposit, fight tooth and nail for it back. Hell, tell them your old pal is the editor of the most popular consumer rights site on the internet with over 9 million pageviews per month and we will drop the wreckage on their asses.

As for your next car, ever think about driving a used beater? There’s a concept we enjoy on the site called, “don’t buy what you can’t afford,” which is to say, avoid going into debt. If this is too hard, and you do go through a dealership, come with your own financing, i.e., arrange your financing with your bank or credit union first and walk in with that.

Actually, that’s the reason I don’t want to keep the car. With 3 monthly payments I could get a 10-15 year old Honda….Traffic is so bad around DC that I realized that I’m not driving as much as I thought I would.
I guess I could loose the deposit, but that’s better than overpaying $8000 in interest on a $17k car. I’ll see how the developments will go. That old pal editor – is a powerful thing anyway. I just sort of feel bad, cause the finance manager seemed so be willing to help me, etc. I guess they have to pretend friendly. Actually spot delivery is something big in MD – Here the say that MD MVA (DMV) doesn’t permit temp tags – “

“Temporary registration permits, or certificates and plates, may not be used by dealers in cases where vehicles are released to potential purchasers prior to consummation of a vehicle sales transaction. These types of transactions are commonly referred to in the industry as “Spot Delivery,” “Fronting” “Macarthur Statement,” etc.
I guess it’s just a lot of stress, etc. I’ll try calling the manager and let me know what’s going on. The only thing I’m worried about is that he doesn’t mind me getting my own financing.

(Photo: Vince Brown (attila))

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