Car dealerships often advertise “guaranteed credit approvals” and “same day financing”. In the cases where it sounds like it is too good to be true, it usually is.
These unbelievable deals sometimes result in deceptive sales practices, leaving you in a worse position than you were in before you visited their lot.
There are a few different kinds of auto finance fraud cases. If you have experienced any of the below, you may have a case:
In a yo-yo scam, the dealership will inform you that you have been approved for financing of a vehicle and give you the vehicle to take home. The dealership will later ask you to return back with your vehicle – sometimes by telling you that your financing has fallen through or that you need to sign more papers. If you return, the dealership may demand that you pay higher fees, more payments or a higher down payment in order to keep the car. But if you refuse, they will take the vehicle from you. This “bait and switch” is referred to as yo-yo financing. If you have had your vehicle taken from you by a dealer or have been asked to return to the dealership with your car, you may be a victim of a yo-yo scam.
In order to gain extra profits, some dealerships pass on fees that they pay to finance companies and then hide these fees in the contract. Car dealers must disclose all fees to you and include them in their Truth In Lending Act disclosures. If you have paid over two to three times the amount of the sticker price of the vehicle, you may be a victim of a discount fee scam.
Car dealers often try to increase their profits by telling consumers that they must buy add-on products and services in order to get financing. These additional costs include, but are not limited to: VIN etching; rust protection; credit life insurance and gap insurance. If you have been told that you must buy one of these products or services, you may be a victim of dealer fraud.
Yo-yo scams, discount fees and add-on scams are illegal under state financing laws. Victims of auto fraud financing may be able to recover the illegal fees and other damages. In some cases, settlements for our clients have exceeded $100,000.
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In this important educational series, Michigan consumer law attorney Ian Lyngklip of Lyngklip & Associates discusses important considerations regarding Automobile Finance Fraud.
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You can find more consumer credit information and tips on the Consumer Insider channel. There, Ian breaks down the ways that car dealers, credit bureaus, and debt collectors cheat consumers and violation the law.