Many car buyers are subject to "yo-yo" deals in which a consumer with bad credit goes to a dealership, fills out paperwork, and takes possession of a vehicle that same day. Days or weeks later, however, the consumer may hear from the dealer that the financing has fallen through but that he or she can return the car or come back for further negotiations. The dealer may demand a higher down payment or new financing terms; or steer the consumer toward a cheaper, less desirable car when the buyer has already put down a deposit and given up his or her trade-in.
Consumers can avoid getting entangled in these types of deals by getting their credit report and credit score before car shopping and by talking to their banks or credit unions. This can help them understand exactly what they can and cannot afford, without depending on the dealer for financing. Consumers with trade-ins should try to sell them on their own, which allows them to focus only on the price of the new car once they are at the dealership. Car shoppers who owe more on a trade-in than what it is worth should try to pay down that loan before getting a different car. Consumers also should take the time to read every document, paying close attention not only to the monthly payments but to the entire cost over the length of the loan. Contrary to popular belief, there is also no three-day right to back out of a vehicle purchase.