FTC to auto dealers: don’t toy with yo-yo financing

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Buying a car can be exciting, but what if there are strings attached? Some buyers told us that they financed a car through a dealership, signed a contract, and drove the car home, only to be told that the financing didn't go through and they had to sign a new deal or lose their down payment. There’s a name for that: it’s called a “yo-yo” financing tactic. It’s just one of a trunk-load of charges the FTC is bringing against Sage Auto Group, a group of nine Los Angeles-based auto dealerships, and the three brothers who control them.

The FTC alleges that Sage Auto engaged in a host of yo-yo financing tactics. For example, Sage Auto allegedly told customers the contract was cancelled, but the dealer would keep their down payments or trade-ins if the customers refused to sign a new deal. The dealerships even threatened some customers with arrest, criminal prosecution, or vehicle repossession if they didn’t take the second deal – even when the original deal was still valid.

As if yo-yo financing isn’t egregious enough, the FTC also alleges the defendants packed on extra charges for aftermarket products and services, like extended warranties, guaranteed auto protection, and service plans, without customer consent. Sometimes, Sage Auto falsely claimed the products were required as part of the sale or financing or were being thrown in for free. In reality, Sage Auto was adding those charges into the amount financed by consumers.

The FTC’s complaint also says Sage Auto used phony online reviews to tout their dealerships and to try to discredit negative reviews about the company’s bad advertising, sales, and financing practices. Potential customers rely on online reviews to decide where to shop, and Sage Auto undermined that ability with phony reviews written by its employees and other people tied to the dealerships. The FTC’s lawsuit seeks a court order to require Sage Auto to stop these bad practices and give refunds to some customers.

Today’s action is part of the FTC’s continuing efforts to protect buyers from deceptive advertising in the auto marketplace. If you think you’ve been misled when buying a car, report it to the FTC.

If you’re in the market for a car, don’t let deceptive sales, financing, or leasing practices leave you spinning your wheels. To find your best deal, shop around and compare offers from different dealers and financing sources like banks or credit unions. And check out our free publications about buying and owning a car before you start shopping.

Blog Topics: 
Money & Credit


How about swearing your the co signer just to find out from the CU that you are the "owner"- other person did not qualify, but nobody told me.

The FTC publication, Co-signing a Loan, explains your obligations if you decide to co-sign on a loan for a friend or relative.

I had a shock also, bought a Genesis fro Prime Dealer in Rockland at their Quincy outlet. The sales service was fine except, last minute they asked me if I would like a Genesis symbol on the car instead of Huyandi. Only $ 125 and then I find out the same is available on line for $10.

2nd I was asked to sign for something after the deal was done and ready to take the car away. It turned out a form that was annually deduction $180 for updating my GPB and connection to Blue link, as the installed system will only work for 6 months.

This is a very useful and informative article. It's a shame we have to become so educated about the ripoff tactics of these so-called "businesses" but an educated consumer certainly has the upper hand in these situations.

Thanks 2 All 4 Info! bf 5

I have a claim against Felix Chevrolet and Ally Bank. English is my second language and I need help in Spanish. Thanks

We don't publish personal information, or contact people directly. The Los Angeles Department of Consumer & Business Affairs has a information in Spanish online, and lists contact numbers so you can call for more help. The FTC also has information about buying & owning a car in Spanish.

I need to file a report....this company let my son write a bad check so that he could get the car off the lot....let the insurance xompany move them off the insurance policy AFTERWARDS and they are a financing company...so the insurance removed them and the comp and collision off of his car...

whay does people hv to be so sheisty to make a buck. I m glad to learn there is somewhere to complain and have action taken againat them. They also relorted my son to dmv 2 days later for writing this bounced check

You can report the car dealer to your state Attorney General’s office and to the FTC. File a complaint with the FTC at FTC.gov/complaint. The information you give will go into a database that law enforcement uses for investigations.

If you have questions or concerns about what the insurance company did, you can contact the insurance commission for your state. Search on line for your state name + the words "insurance commission."

Stay away from Hyundai Motor Finance Corporation. We are going through hell with them, after deciding to assume my father's lease, upon his death. They are by far the most inept, shady organization that I have ever done business with.

It is funny that the last person warned about Hy unday Kia Finance. We are having all kinds of trouble with them. We bought our leased car back in May and as of today October 10, they had not given us the tittle of the car. We paid off the car. "They are by far the most inept organization we had ever done business with". Stay away from them.

How long and successful are the complaints you file? It's a real shame that usually a car is a necessity especially if you are in a rural area and have to travel for a doctor. White collar crime affects blue collar dollars in America

Why don't you explain that yo-yo financing is not necessarily unlawful, and state when dealers may legally require a new car just purchased to be returned if financing falls through, etc.? The article implies that all such situations are unlawful, when they are not.

Sometimes, depending on the sales contract and applicable law, a dealer may require a consumer to return a car if the dealer can't get financing.  

However, the dealer can't have set up the situation knowing it likely wouldn't be able to fulfill the original financing terms. 

And regardless, if financing falls through, the dealer can’t engage in deceptive or unfair practices (like threatening to hold back the customer's down payment) to get the consumer into a new financing deal.

In business many auto dealers cheat to their customer and this is very shameful.

Can anyone answer my question?

My coworker was a victim of this yoyo financing by a car dealership. She did return the car and now they are taking her to small claims court for the mileage she put on the car. High pressure sales tactics on low income women who don't know any better. Something needs to be done about this.

The FTC wants to know about this. Please report it at FTC.gov/complaint. The information you give will go into a database that the FTC and other law enforcement use for investigations.

Wyomom, by chance was this dealership in denver.. I'm from cheyenne and this dealership in Denver is doing the same thing to me

I think this is happening to me. I just "bought" a 2009 dodge ram and was pre qualified through capital one and went to buy this truck on 7/15/17, wrote them a check for 1000 down payment and drove off the lot. Got insurance and all that and then the dealership calls me today 7/19/17, and asks for 3000 down or a co signer. Now my car was just totaled and it was not an at fault accident so I'm just waiting for that situation to close up but I need a vehicle as I have a job requiring me to travel. I don't know if this is yo yo financing but from stories I've read online, mine seems similar

I am one of the victims in the sage auto group scam along with many other illegal tactics that were used on myself and my wife when we purchased our Silverado I also received in a certified letter that I needed to return the truck because they were supposedly unable to get us financed, however we knew that to be untrue at this point only for the fact that by then I had many conversations with the finance company regarding other issues that happened that night. Other then that I would have thought I really needed to return my truck. On the other hand As per some of the comments in this blog Dnew, the dealership can ask you to return the car if they legitimately cannot get you financed, However I would certainly look into the matter to see if it's actually valid in your case or not. Best of Luck

Does anyone know how long a car lot had to get you financially approved be for you can get your deposit back ??

If you think you were misled when you bought a car, report it to the FTC.

I entered negotiation with a dealership in Burlington wa I live about 5 hours away so I refused to go to the lot until I knew I was financed. 2 days later we informed that I am financed as long as my girlfriend cosigns and I was going to put 3k down because I wanted to. I am on disability and my check was going to clear in 2 days so the dealership contacts the bank and informs me that they agreed to finance me for 0 down and in 2 days I would make my payment towards the premium.

I make the drive after submitting all financial info and when I get there it is 20 minutes before they close so they are rushing us they show me the financing option detailing my lender and term options and what the financing looks like now and when I make my deposit I confirmed legitimacy because I got a credit alert naming the same credit union so I sign the paper and all of a sudden the price went from 11988 to 18645.35. I was told that the dealer provided warranty if the vehicle had less than 100 k miles then I see 2 separate insurance coverage for a total of almost 5 grand and the retail contract had no information on my lending institution on it.

The finance manager rushed us to the office and starts telling us where to sign and then has us sign an empty slip stating that it's for quick correction of anything that needs to be changed like a misspelled address or something.

We are leaving and I'm excited because I finally get to see my truck for the first time and as the sales agent hands me me keys he hands me something that states it is sold as is with no warranty. I reminded him that he said that they warranty my truck since it does have 100k miles. He said that the sign meant Ford doesn't warrantee the truck but they will I asked him why I was charged for the added warranty when he said he was able to negotiate the coverage at no cost and I received no answer because he rushed back inside.

When I got home I realized I don't have a transfer of title or temporary plates they had given me an e permit and temporary registration which was not filled out correctly and states the selling price of 11988. It is my first car purchase so I think it's common practice. Then my check clears and I get my money order and quickly put the banks name on it only to realize the dealership kept the paperwork with my lending terms from the bank. I have nothing that mentions my relationship with them in fact. So I google their number and tell them I have their money order as I fill I the address info she tells me they don't have the paperwork yet sometimes it take a couple days to get it from the dealership and call back in a week.

At this point I call my finance manager and tell him that I didn't get my lending contract for the bank and they were waiting for the paperwork so i can make my payment then I inquired about registration requirements like plate number etc he said he already took care of it and I will get it in a couple weeks and he was sending the paperwork to the dealer that day. I pay 1200 for insurance and call the bank back for them to say they can't speak with me I need to call the dealer when I do I am told my finance manager has been fired and they transfer me to someone else. I leave a detailed message and I hear nothing for 6 days meanwhile I am getting hard inquiries from auto lenders and credit unions and I am about to out a fraud freeze when this guy calls apologizing for the previous guys actions he has been fired and I need to come back to the dealership because the bank denied me.

I had already confirmed my acceptance by signing the paper they kept and called them and never received a notice of denial from anyone meanwhile. It's been almost 3 weeks. The sale was never reported to the DMV and some papers indicate a cash sale of 11988 while others indicate financing of 18645. I notice I'm not even on the transfer of interest or the temp reg even though he had me sign everything. Then I get a denial in the mail from a bank I never heard of for an attempt to finance 10600 initiated my the dealer after he had already told me he couldn't get me financed and insinuated that my original finance manager was misleading and negligent with my paperwork. Now he wants to meet tomorrow for my girlfriend to sign another contract with higher rates. He still hasn't provided me with the original finance contracts or any adverse action notices and says that he will bring the denial from the original bank but can't provide copies of their communication paperwork with any of the lenders.

I want a lawyer to look at my paperwork because it seems like not only was I misled and defrauded but my credit was accessed 7 times without my permission and the contract agreements seem like it was a cash sale while warranty and retail contract indicates financing and I'm not even mentioned on some of them also the assignee or Leon holder boxes say not applicable. What are my rights and how should I proceed? There is so much more but this comment is sooo long as is. Can you please tell me who I should contact. Oh and my 3 thousand dollar money order is no longer valid because it was already addressed and dated for 3 weeks ago and I was directed to shred it and count it as a loss. Can I sue?

Keep any paperwork you got from the car dealer or banks. You can contact your state state Attorney General about your experience with the car dealer. You could contact a legal aid lawyer to see if you're eligible to get help. Use this state-by-state list from the American Bar Association to find a private lawyer in your state. It also has information about your state court system and explains what you can do on your own. The State Bar Associations website is another resource. Use the State Bar Associations list to find the bar association in your county, and call them to ask about finding a lawyer.

Thank you for your time and advise Bridget I have contacted my AG and he has assigned an investigator and has provided a copy of my complaint and supporting documents to the Director of the Department of Licensing here in Washington. I will look into the organizations and programs you referred as the attorneys who reviewed our case have stated that we have a great case but we can not afford their assistance and our everyday bills. At this point I am still in the dark about whom I need to send payments to for my truck. I attempted to contact the GAP and vehicle Service Contract company (Zurich) which the dealership provided unbeknownst to me to cancel these extra $5,000 costs and they don't have any records of our contracts or account number. I purchased insurance the day after I brought it home any way so at least that is covered for the next year. Also, this past Saturday I received a Prepaid Maintenance Plan Card from the dealership but no further info was provided. This was the first time I have went to a dealership for a vehicle and I will never do it again. I am afraid to drive to the post office right down the street because I don't know if it's legal and I'm not sure if they can come and take it while I'm inside and leave me stranded. I can't get any info about title history or registration history. I have spent a good $75 looking on vehicle history sites just trying to figure out why everything under the hood has brand new tags and parts. I want to take it to the state patrol to get it looked at since the dealership won't provide me with any historical information. Sorry to unload all of this on you I guess I just needed to vent.

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