Avoid Being Scammed by Car Dealers with Yo-Yo Financing

February 13, 2018


Car dealers use many deceptive practices to sell their vehicles, but perhaps none are as deceptive as Yo-Yo financing. The term Yo-Yo financing refers to the back and forth natures of a vehicle’s ownership (sold, repossessed, sold to another person, repossessed again).


THE SCAM: A typical Yo-Yo dealership scam involves a buyer purchasing a vehicle on a “conditional contract.” These contracts are conditional upon financing being approved. The car dealer will have the buyer sign a conditional contract, congratulate them on their new purchase, and the buyer will take the vehicle home for a few days or weeks. Taking the vehicle home instills in the buyer a sense of ownership that the dealer later relies upon.  


A few days later, the dealer calls the buyer and regretfully informs them that their financing agreement has been denied. The dealer then invites the buyer back to the dealership to discuss a new financing agreement (with a higher interest rate, a larger down payment, and less favorable terms).


If the buyer refuses to negotiate to new terms, the dealer may threaten to report the car stolen or may threaten to repossess the car, sometimes taking the vehicle from the buyer’s driveway in the night. The dealer may then attempt to charge the buyer exorbitant “rental fees” for their use of the vehicle.


Yo-Yo scams are illegal. Car dealers often violate state and federal law when they try to force a buyer to give back a car or force a change to the deal. Consumer protection laws protect the buyer by allowing the buyer to sue the car dealership for damages and attorney’s fees.


Recommendations for purchasing a vehicle from a car dealership:

  • Get pre-approved for a car loan from a bank before you begin shopping for a vehicle.

  • Do not tell the dealer about your pre-approval until you settle on a price. You can tell the salesman that you are open to all options. Often, the dealer may lower the price if they believe they can recoup some of their money through the interest on loaning you money.

  • Do not accept a conditional contract – make sure your financing is approved before driving the vehicle off of the lot.

  • Do not “take the car home” before officially owning the vehicle.

  • If you fall prey to a Yo-Yo scam, when the dealership calls you to tell you the financing agreement fell through, ask to see the denial letter. You are entitled to it. Sometimes, the dealership will be bluffing and this request will end the matter.

  • If you run into any issues with your vehicle purchase, call Car Dealer Fraud Lawyer Michael F. Niznik for a free consultation.


Michael F. Niznik is a Philadelphia Car Dealer Fraud and Lemon Law Lawyer who handles cases throughout Pennsylvania, New Jersey, New York and Delaware. If you or someone you know is having trouble with a vehicle that they purchased, contact the Law Office of Michael F. Niznik for a free consultation. We maintain two offices for your convenience and can be reached 24/7 at 267-589-0601.


Tags: Philadelphia car dealer fraud lawyer, Montgomery County car dealer fraud lawyer, New Jersey car dealer fraud lawyer, Lemon Law lawyer, Philadelphia lemon law lawyer, New Jersey lemon law lawyer, used car fraud lawyer, Pennsylvania car dealer fraud lawyer.


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