Auto loan scammers, or “yo-yo” scammers, are a serious problem in the United States. These scammers work by offering a very low interest rate at the beginning of the conversation, only to raise the rate once the driver has signed the contract.
This can leave consumers confused and frustrated, and often leads to them paying more for their car than they originally agreed to. But there are a few steps you can take to avoid being tricked by a yo-yo scammer and educating yourself is key.
What is a yo-yo scam?
A yo-yo scam occurs when you go in to discuss a car loan. The dealership might offer you an auto loan with a very low interest rate at the beginning of the conversation — usually a rate that is much lower than normal. The rate might sound too good to be true, and it usually is.
You will be asked to sign documents with the lower rate listed, but a few days, or even weeks later, you’ll get a call or an email saying that the dealer can’t offer you that interest rate. They’ll also say that you need to renegotiate — or else the offer will be rescinded completely.
The newly negotiated interest rate is typically much more expensive than the original loan, making for a confusing and frustrating experience. When you ask about the rate hike, it is likely that the dealer will say that you didn’t qualify for the initial interest rate, despite originally leading you to believe you did.
How to avoid yo-yo financing scams
Following these four steps will help you avoid yo-yo…
