Take a moment and imagine somebody holding a yo-yo in their hand. Now let's watch the imaginary yo-yo user fling the toy downwards, allowing it to spin steadily at the bottom of the outstretched string. With a quick flick of the wrist, the spinning yo-yo climbs back up the string and returns obediently to the user's hand. That's what a yo-yo is supposed to do: obey its user, and return to the user's hand upon command.
Some car dealerships took the concept of the yo-yo and applied it to their auto loan financing deals. The difference, however, is that they're not playing with a toy spindle, but instead they've attempted to turn their clients into their own personal yo-yo's.
Yo-yo financing refers to the practice of originating auto loans contingent on a credit check that will be performed at a later date.
Letting the Yo-Yo Sleep
When car salesmen practicing yo-yo financing come across interested buyers, they bait those buyers into purchasing vehicles by offering great prices. The salesmen requires the buyers to finance auto loans through the dealership, but those financing options have contingencies saying the price is only valid if the buyers have qualifying credit scores.
"Don't worry about that though," the salesmen will say. "We'll run your credit later, so go ahead and take the car home."
Thinking the credit check is a mere formality, the buyers agree and happily head home with their new rides.
When home, the buyers park their vehicles in their garages, and take every precaution to make sure their new purchase is well taken care of. As soon as they're able, they show their new cars off to friends and family, taking them for rides around town, and allowing their loved ones to experience the beauty that the new owner will enjoy for years to come.
Some buyers even list their old vehicles for sale, and try to liquidate that now useless asset for some extra cash.
This whole phase of enjoying one's newly purchased vehicle is exactly what the scamming car dealership wants. Their yo-yos are "sleeping" at the bottom of their strings-unaware that they can be retracted at any moment.
Some car dealerships took the concept of the yo-yo and applied it to their auto loan financing deals. The difference, however, is that they're not playing with a toy spindle, but instead they've attempted to turn their clients into their own personal yo-yo's.
Yo-yo financing refers to the practice of originating auto loans contingent on a credit check that will be performed at a later date.
Letting the Yo-Yo Sleep
When car salesmen practicing yo-yo financing come across interested buyers, they bait those buyers into purchasing vehicles by offering great prices. The salesmen requires the buyers to finance auto loans through the dealership, but those financing options have contingencies saying the price is only valid if the buyers have qualifying credit scores.
"Don't worry about that though," the salesmen will say. "We'll run your credit later, so go ahead and take the car home."
Thinking the credit check is a mere formality, the buyers agree and happily head home with their new rides.
When home, the buyers park their vehicles in their garages, and take every precaution to make sure their new purchase is well taken care of. As soon as they're able, they show their new cars off to friends and family, taking them for rides around town, and allowing their loved ones to experience the beauty that the new owner will enjoy for years to come.
Some buyers even list their old vehicles for sale, and try to liquidate that now useless asset for some extra cash.
This whole phase of enjoying one's newly purchased vehicle is exactly what the scamming car dealership wants. Their yo-yos are "sleeping" at the bottom of their strings-unaware that they can be retracted at any moment.
