This type of car buying scam gets its name from purchasers who are sold vehicles “on the spot.” The dealership says that the buyer has been approved for the vehicle, but he or she is later told that the financing fell through. There may be some consumer protections to help affected buyers, and there are certainly ways to avoid this common scam.
Background
Spot deliveries allow consumers to purchase a vehicle the same day and drive off in a new or used car. Someone may be strolling through a car lot just to look and then be enticed to purchase the vehicle on the spot. However, this process can leave buyers with less favorable credit in a vulnerable position. A spot delivery involves the dealership beginning the loan application and allowing the customer to drive off in the vehicle before financing is completed. This is especially common when the sale occurs after banking hours when the loan application could be reviewed and approved by a reputable bank or finance company.
Once the application is actually reviewed, the bank may approve or decline the application. If the application is denied, the buyer may be asked to return to the dealership so that a new loan application can be submitted which may return less favorable credit terms. The spot delivery scam takes shape when the dealer knows that the buyer will not be approved at the rates that he or she cited and then later contacts the buyer and asks for a cosigner, a higher monthly payment, a higher sales price or a higher interest rate.
Problems with Spot Deliveries
Spot deliveries are a common way for dealers to finalize sales in a deceptive manner. The buyer has already agreed to the terms. He or she grows attached to the vehicle. When a problem with credit makes the deal fall through, the buyer may be in an even more vulnerable position and agree to nearly any new terms in order to keep his or her new vehicle. Dealers may threaten to repossess the vehicle. Some even threaten the buyer that they will report the vehicle as stolen if the buyer does not come back in and sign new finance documents. If a buyer offers to return the vehicle, a deceptive dealership may state that the buyer will be responsible for hefty rental rates or charged for wear and tear during the brief time when he or she had the vehicle.
Legal Protections
Whether this type of scam provides any legal protections depends on the applicable state laws and the particular circumstances of the case. The sales contract also sets out the terms of the agreement, so if a buyer agrees that the dealership can request the return of the vehicle if financing falls through, he or she will have limited legal options since the buyer must usually beware of what he or she buys and signs.
Some states require the dealership to return the buyer’s down payment or the trade-in that was used for the down payment. Other states provide fewer protections, allowing the dealership to make the purchase contract contingent on financing
Avoiding the Scam
The single best way to avoid such a spot delivery scam is to get your own financing separate from the dealership. Contact your local bank or other financial institution to inquire about financing. If you do rely on financing through a dealership, ask for a copy of the documents that show that financing is complete, even if this means that you do not drive off the lot with the new vehicle that day. If the sales contract includes any conditional provisions, hesitate before signing. You can have the contract reviewed by an attorney. Finally, if the dealership says that you must return the vehicle because the financing fell through, ask to see the communication from the lender that states this information. If you were a victim of a spot delivery scam, consider discussing the issue with a consumer protection lawyer. Provide him or her with all documents related to the sales contract and a timeline of events.
