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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If the car dealership calls you saying that you need to bring the vehicle back for any reason, always ask why. Many dealerships will bring consumers back to the dealership in order to take their cars away, even though the first payment isn’t due yet. The dealer may say that they need to give you an extra set of keys or a free oil change, or be up front and tell you that your financing fell through. Regardless, if a dealer asks you to return with the car, you may be a victim of a “Yo-Yo” scam and you should contact an attorney immediately.
Once the dealer has signed its contract with you, they cannot demand more money for a car. A demand for more money is a classic yo-yo financing scam. If your dealer has demanded more money from you after your deal, you should contact an attorney immediately.
If your car dealership called and asked you to return your vehicle for any reason, then took your car away from you, you may have been a victim of a Spot Delivery or Yo-Yo scam. If this has happened to you, you should contact an attorney immediately.
The Equal Credit Opportunity Act requires that car dealers notify consumers of the reason why their financing was not approved within 30 days. If you were not given any notification, the car dealer may have violated the ECOA. An attorney will be able to help you determine if you have a case or not.
As a consumer, you are entitled to receiving certain documents to complete the sale of your car. Both Michigan and federal law require car dealers to give your financing paperwork at the time of the deal. If your dealer did not give you your installment sale contract, buyers order or other documents along with the sale of your car, you should immediately call an attorney. The refusal to turn over this paperwork is a red flag, as this may signify a potential spot delivery or yo-yo financing case.
If your car was taken back by the dealership as a result of deceptive practices, you may be a victim of a Spot Delivery or Yo-Yo scam. These scams may violate both Michigan and federal law.
Many car dealerships will pressure you into buying extra services to boost their profits. The car salesman may tell you that these extra services are mandatory, but in most cases they are not and state law will prohibit the dealer from charging you for these without your consent.
If your car dealership has called and asked you to come back to fill out more paperwork, you may be a victim of a Spot Delivery or Yo-Yo scam. You should always ask “why” more papers are needed and ask for copies to be emailed to you before you agree to return to the dealership. If the car dealer is still not willing to cooperate, you should call an experienced attorney.
If you have already received a temporary tag, the title or keys to your car, it is yours to keep unless you default on your loan. If your car dealer still insists that you return to the dealership, you may be a victim of yo-yo financing and you will need help from an attorney.
If the total financed amount of your vehicle ends up being double or triple the price of the sticker price of the vehicle, the dealer may have hidden a discount fee in the price of your car. Dealers cannot charge you any fee for financing a vehicle without telling you the amount of that fee and its effect on your interest rate. If a dealer told you that your car cost more because you financed it, you may be a victim of a discount fee scheme.
This information is used for us to gauge where you are in the process so we can better help you through the process.
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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