Many new and used car buyers rely on the financing available at the dealership to pay for their cars. Find out why you might benefit from looking elsewhere to finance your new car, and what you should watch out for if you get your auto loan at the dealership.

Shopping Around for Auto Financing Could Mean Better Rates

The first and most obvious reason not to get your auto loan at the dealership is that there are probably better deals available from other lenders. If you have a bank account or are a member of a credit union, your financial institution will probably be able to offer financing at a lower interest rate, and with better terms than you will find on the lot. Your bank or credit union already has a financial relationship with you. They also can likely transfer funds from your other accounts if you miss a payment. Because of this, lending to you is less risky, and they can put a lower price tag on that risk.

If you walk into a dealership without knowing how you are going to pay for the car, the dealership has all the leverage. Psychology says that once you have a thing, you will work hard to keep it. At the dealership, the car salesperson will help you find the car of your dreams, and only then will talk about financing. That way you will say yes to a higher interest rate rather than walk away from “your new car.”

Getting Your Auto Loan at the Dealership Puts You at Risk of Yo-Yo Financing Schemes

So far, nothing we have talked about is illegal. It’s just the psychology of the deal. However, many Michigan dealerships go further than that, crossing the line from manipulation into auto fraud schemes. One of those schemes is the yo-yo financing contract. Here’s what it looks like.

Kelly walks onto a used car lot on a Friday evening around 4:00 p.m. and finds a sedan that will suit her needs. She asks the salesperson for financing through the dealership’s lender. That financing includes terms like the down payment, monthly payments, length of the loan, and interest rate. At around 6:30, she and the salesperson seal the deal. Kelly signs the financing agreement, gets the keys and drives away in “her new car.”

Then on Monday, Kelly gets a call from the dealership. The salesperson who sold her the car tells her the lender couldn’t approve the loan as written. He says Kelly will need to pay an additional $2,000 or agree to a 1% hike in the interest rate on her car. When Kelly pushes back, the salesperson says that he will get fired unless she helps him straighten out this mistake. When she still won’t agree, he threatens to report the vehicle as stolen. Kelly gives in and says she’ll return the car, only to be charged a restocking fee when she brings it back in. Even worse, Kelly is told that her trade-in vehicle has already been sold.

What to Do if Your Dealership Tries to Take Back Your New Car

What happened to Kelly is illegal. The Truth in Lending Act and the Michigan Credit Reform Act both prevent yo-yo financing schemes and give consumers protection when dealers try to take advantage of them. But dealerships still use yo-yo financing against unknowing consumers all the time. If you find yourself caught up in this auto loan fraud you should:

  • Carefully review all the documents you got from the dealership – under Michigan law, if the dealership is unable to sell the loan, the dealer must honor the contract by accepting the payments due under the contract as written; thus, if you want to keep the vehicle, you must make timely payments directly to the dealer.
  • If you would prefer to rescind the deal, you have the right to return the vehicle and refuse to make any payment, as well as get any down payment or trade in value back without a “restocking fee.”
  • Demand a financing denial letter from the lender
  • Remove all of your personal belongings, including the paperwork on the deal, from the vehicle – unscrupulous dealers have been known to illegally repossess the vehicle when this type of dispute arises.
  • Keep an eye on your credit history – unscrupulous dealers may continue to illegally “shop” the loan, causing numerous inquiries to appear which will in turn lower your credit score.
  • Talk to a consumer protection attorney

State and federal laws give consumers the ability to go after dealerships and lenders that use illegal lending techniques to take advantage of them. At The Liblang Law Firm, P.C., we have decades of experience helping people who get caught up in yo-yo financing. We can help you identify your options and put shady lenders in their place.

Dani K. Liblang is a consumer protection lawyer at The Liblang Law Firm, PC, in Birmingham, Michigan. She helps the victims of auto fraud schemes protect their rights and their property. If your car has been repossessed on a dealer’s loan, contact The Liblang Law Firm today for a free consultation.

Dani Liblang

Author Dani Liblang

Dani K. Liblang is a collections harassment defense attorney at The Liblang Law Firm, PC, in Birmingham, Michigan. If you are being harassed by debt collectors, contact The Liblang Law Firm today for a free consultation.

More posts by Dani Liblang

Join the discussion 55 Comments

  • Good day! I could have sworn I’ve been to this website before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely delighted I found it and I’ll be bookmarking and checking back frequently!

  • I very glad to find this web site on bing, just what I was looking for : D likewise saved to fav.

  • I really like your writing style, great info , thankyou for putting up : D.

  • Loving the info on this web site, you have done great job on the blog posts.

  • Some really marvelous work on behalf of the owner of this website , perfectly outstanding subject matter.

  • I like the valuable information you provide in your articles. I’ll bookmark your weblog and check again here frequently. I am quite certain I will learn lots of new stuff right here! Best of luck for the next!

  • It’s really a cool and helpful piece of info. I am happy that you just shared this helpful info with us. Please keep us up to date like this. Thank you for sharing.

  • Thank you for the sensible critique. Me and my neighbor were just preparing to do a little research on this. We got a grab a book from our area library but I think I learned more from this post. I am very glad to see such great info being shared freely out there.

  • You should take part in a contest for one of the best blogs on the web. I will recommend this site!

  • Really excellent info can be found on weblog.

  • Thanks for these guidelines. One thing I should also believe is that credit cards supplying a 0 interest rate often attract consumers in with zero rate of interest, instant authorization and easy on the web balance transfers, but beware of the real factor that will certainly void that 0 easy street annual percentage rate and as well as throw one out into the terrible house quickly.

  • It?s really a great and useful piece of information. I?m glad that you shared this helpful info with us. Please keep us informed like this. Thanks for sharing.

  • Thanks for your write-up. I would love to say that the very first thing you will need to accomplish is check if you really need credit score improvement. To do that you have got to get your hands on a duplicate of your credit file. That should never be difficult, ever since the government necessitates that you are allowed to obtain one free copy of your credit report every year. You just have to consult the right people today. You can either look into the website for your Federal Trade Commission or perhaps contact one of the major credit agencies instantly.

  • I’d need to examine with you here. Which is not something I normally do! I enjoy studying a put up that may make folks think. Also, thanks for allowing me to comment!

  • F*ckin? tremendous issues here. I?m very satisfied to peer your article. Thanks a lot and i am looking forward to contact you. Will you please drop me a e-mail?

  • Virtually all of what you claim is supprisingly accurate and it makes me ponder the reason why I had not looked at this in this light before. This piece really did switch the light on for me personally as far as this specific topic goes. Nevertheless there is actually just one issue I am not necessarily too comfortable with so whilst I attempt to reconcile that with the main theme of the position, permit me observe just what the rest of your visitors have to say.Very well done.

  • That is very attention-grabbing, You’re an overly professional blogger. I have joined your rss feed and look ahead to in quest of extra of your excellent post. Additionally, I’ve shared your website in my social networks!

  • It?s actually a nice and helpful piece of information. I am glad that you just shared this useful info with us. Please stay us informed like this. Thank you for sharing.

  • go to site says:

    I just like the valuable info you supply to your articles. I?ll bookmark your blog and check once more here regularly. I’m moderately sure I?ll be informed many new stuff proper right here! Best of luck for the following!

  • Thanks for the article. My partner and i have constantly seen that most people are desperate to lose weight as they wish to appear slim and also attractive. On the other hand, they do not often realize that there are more benefits to losing weight in addition. Doctors declare that obese people experience a variety of conditions that can be instantly attributed to their excess weight. The good news is that people who are overweight plus suffering from a variety of diseases can help to eliminate the severity of the illnesses by way of losing weight. It is possible to see a constant but identifiable improvement in health when even a moderate amount of fat loss is attained.

  • Just wish to say your article is as surprising. The clearness in your post is simply spectacular and i can assume you are an expert on this subject. Well with your permission allow me to grab your feed to keep up to date with forthcoming post. Thanks a million and please continue the enjoyable work.

  • This website is really a stroll-by for all of the information you wished about this and didn?t know who to ask. Glimpse here, and you?ll undoubtedly uncover it.

  • Wonderful goods from you, man. I have understand your stuff previous to and you are just too wonderful. I really like what you have acquired here, certainly like what you’re stating and the way in which you say it. You make it entertaining and you still care for to keep it wise. I cant wait to read far more from you. This is actually a terrific website.

  • prodentim says:

    Generally I do not read article on blogs, but I wish to say that this write-up very forced me to try and do it! Your writing style has been amazed me. Thanks, very nice post.

  • My brother recommended I might like this blog. He was totally right. This post truly made my day. You cann’t imagine just how much time I had spent for this information! Thanks!

  • In line with my study, after a property foreclosure home is offered at an auction, it is common for that borrower in order to still have some sort ofthat remaining unpaid debt on the loan. There are many loan merchants who try to have all expenses and liens repaid by the subsequent buyer. Even so, depending on certain programs, rules, and state guidelines there may be a few loans which are not easily handled through the shift of personal loans. Therefore, the responsibility still falls on the customer that has got his or her property foreclosed on. Thanks for sharing your ideas on this web site.

  • Thank you, I have recently been looking for info about this topic for ages and yours is the greatest I’ve found out so far. But, what about the conclusion? Are you positive about the source?

  • FangWallet says:

    Helpful info. Fortunate me I discovered your site by chance, and I’m stunned why this twist of fate did not happened in advance! I bookmarked it.

  • I’ve learned newer and more effective things from the blog post. One more thing to I have recognized is that usually, FSBO sellers may reject anyone. Remember, they can prefer never to use your expert services. But if an individual maintain a steady, professional partnership, offering guide and staying in contact for around four to five weeks, you will usually have the capacity to win an interview. From there, a listing follows. Many thanks

  • very good submit, i definitely love this website, keep on it

  • Judi Bola says:

    I am often to blogging and i actually recognize your content. The article has actually peaks my interest. I am going to bookmark your site and hold checking for new information.

  • I just couldn’t go away your site prior to suggesting that I extremely loved the standard information an individual supply in your guests? Is gonna be again continuously in order to check out new posts

  • I’m typically to blogging and i actually recognize your content. The article has actually peaks my interest. I’m going to bookmark your site and maintain checking for new information.

  • I’m typically to running a blog and i actually admire your content. The article has actually peaks my interest. I’m going to bookmark your web site and keep checking for brand spanking new information.

  • Thanks for your post. What I want to comment on is that while looking for a good on the internet electronics retail outlet, look for a web page with entire information on important factors such as the privacy statement, protection details, any payment methods, as well as other terms along with policies. Generally take time to investigate the help in addition to FAQ areas to get a greater idea of how a shop performs, what they can do for you, and in what way you can use the features.

  • I truly appreciate this post. I have been looking all over for this! Thank goodness I found it on Bing. You have made my day! Thank you again

  • Greetings! Very helpful advice on this article! It is the little changes that make the biggest changes. Thanks a lot for sharing!

  • It is appropriate time to make some plans for the future and it’s time to be happy. I have read this post and if I could I want to suggest you some interesting things or tips. Perhaps you could write next articles referring to this article. I want to read even more things about it!

  • It is actually a great and helpful piece of info. I am satisfied that you shared this useful information with us. Please stay us informed like this. Thanks for sharing.

  • Can I simply say what a aid to search out someone who really is aware of what theyre speaking about on the internet. You positively know the way to bring a problem to light and make it important. Extra folks have to read this and understand this facet of the story. I cant consider youre no more popular because you undoubtedly have the gift.

  • It?s really a cool and useful piece of information. I am glad that you shared this useful information with us. Please keep us up to date like this. Thanks for sharing.

  • Simply want to say your article is as astonishing. The clarity to your publish is just spectacular and i could think you’re an expert on this subject. Fine along with your permission let me to take hold of your RSS feed to keep up to date with coming near near post. Thanks one million and please continue the rewarding work.

  • Just want to say your article is as astonishing. The clarity in your post is simply spectacular and i could assume you’re an expert on this subject. Well with your permission allow me to grab your RSS feed to keep updated with forthcoming post. Thanks a million and please carry on the enjoyable work.

  • I would like to thank you for the efforts you’ve put in writing this site. I’m hoping the same high-grade web site post from you in the upcoming also. In fact your creative writing skills has inspired me to get my own site now. Really the blogging is spreading its wings fast. Your write up is a great example of it.

  • Useful information. Lucky me I found your site unintentionally, and I’m stunned why this accident didn’t came about earlier! I bookmarked it.

  • whoah this blog is magnificent i love reading your articles. Stay up the great work! You understand, many individuals are searching around for this info, you could aid them greatly.

  • I would also like to add that when you do not already have got an insurance policy or you do not belong to any group insurance, you may well benefit from seeking the assistance of a health insurance professional. Self-employed or people having medical conditions commonly seek the help of the health insurance agent. Thanks for your post.

  • Thanks for your posting. What I want to say is that when evaluating a good internet electronics shop, look for a web-site with full information on critical factors such as the security statement, safety details, any payment procedures, along with other terms along with policies. Generally take time to see the help plus FAQ areas to get a far better idea of the way the shop operates, what they are capable of doing for you, and just how you can maximize the features.

  • JosephRer says:

    I suffer from chronic migraines and arrange tried numerous medications with speck success. A cocker recommended CBD, so I undisputed to admit defeat give out it a try. I was amazed at how very soon it helped to alleviate my migraine affliction and nausea. I at the moment utter CBD grease regularly as a preventative scale, and be experiencing noticed a valuable let up in the frequency and beastliness of my migraines. I hugely recommend CBD in support of anyone looking in support of a talent alternative to traditional migraine medications.

  • porn says:

    F*ckin? amazing things here. I am very satisfied to look your article. Thanks a lot and i’m looking forward to contact you. Will you please drop me a mail?

  • porn says:

    I have seen loads of useful points on your site about pc’s. However, I’ve got the viewpoint that lap tops are still not nearly powerful more than enough to be a sensible choice if you often do projects that require loads of power, such as video editing. But for world-wide-web surfing, word processing, and quite a few other prevalent computer work they are just fine, provided you don’t mind the little screen size. Thank you for sharing your thinking.

  • This post post made me think. I will write something about this on my blog. Have a nice day!! newsmax tv live streaming

  • This is very fascinating, You’re a very professional blogger. I’ve joined your rss feed and stay up for in the hunt for more of your magnificent post. Additionally, I’ve shared your website in my social networks!

  • I discovered your blog site on google and test a couple of of your early posts. Continue to keep up the superb operate. I simply further up your RSS feed to my MSN News Reader. Looking for forward to reading more from you in a while!?

  • Hello my friend! I want to say that this post is amazing, nice written and include almost all vital infos. I?d like to see more posts like this.

Leave a Reply