3 ways to combat 'yo-yo' car financing

Posted at 6:39 PM, Sep 25, 2015
and last updated 2015-09-25 21:39:20-04

Hitting the road with a new car doesn't mean the deal is done.

That quick approval you get at the dealership is usually subject to final approval from the bank lending you the money.

And if you buy a car outside of core banking hours they'll let you leave with it, but approval may not happen until days later.

That means if the bank spikes the interest rate or kills the deal, you'll be asked to bring it back.

Consumer advocates call it yo-yo financing, the car industry calls it spot delivery, and I call it unfair.

Nevertheless, it's completely legal. So what can you do?

-Read your contract. If financing depends on final bank approval, that has to be stated in your paperwork.

-If the deal falls through I'd go back to the dealership to negotiate. But I'd leave the car at home until the deal is unwound and my down payment and trade in returned. State law say a dealer has to hold your car and title until the deal final lender approval.

-Another option is to obtain financing through your bank or credit union before even shopping for a car. That way you know what your interest rate and payment will be ahead of time.

The Arizona Attorney General's office has more about your rights when purchasing a car here.

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