{"id":2130,"date":"2017-01-16T09:00:56","date_gmt":"2017-01-16T14:00:56","guid":{"rendered":"https:\/\/www.autoraptor.com\/?p=2130"},"modified":"2017-01-16T09:00:56","modified_gmt":"2017-01-16T14:00:56","slug":"risks-spot-delivery-avoid-yo-yo-financing","status":"publish","type":"post","link":"https:\/\/www.autoraptor.com\/blog\/risks-spot-delivery-avoid-yo-yo-financing\/","title":{"rendered":"The Risks of Spot Delivery and How to Avoid Yo-Yo Financing"},"content":{"rendered":"

\"spot<\/h2>\n

You may be a big fan of spot delivery in your dealership, but if you\u2019re not doing it right, you may be hearing from the FTC.<\/h2>\n

Ask any dealership employee what their busiest times are, and you\u2019ll likely always get the same answer: nights and weekends. This is when the average buyer is home from work and available to shop \u2014 and hopefully buy.<\/p>\n

The biggest problem with night and weekend deals, though? Most banks are closed, and if they\u2019re not, they have a skeleton crew. This makes it difficult to secure financing<\/a>\u00a0for some of your customers.<\/p>\n

How many times have you submitted a potential buyer\u2019s financial information and crossed your fingers for it to make it through the bank\u2019s automatic computer system with a definite \u201capproved\u201d \u2014 or even \u201cdenied\u201d? There\u2019s nothing more frustrating than seeing the word \u201cpending\u201d appear as the status. That means you may have to endure a lot of waiting, and if a customer has to wait, there\u2019s a strong chance their eyes are going to wander to that other dealership down the road.<\/p>\n

Situations like these are the reason spot delivery was invented. If your dealership is doing spot delivery correctly, you\u2019re probably a big fan because it lets the customer leave with the vehicle while financing is still pending. It can be an effective method for keeping a customer<\/a>\u00a0and making the sale. That is, of course, if the bank ultimately approves financing at the quoted interest rate.<\/p>\n

Spot delivery can be risky if you\u2019re not careful, and too many dealerships have handled it completely the wrong way. So much so that the Federal Trade Commission (FTC) has its eye on dealerships engaging in unfair or deceptive spot delivery tactics, called yo-yo financing.<\/p>\n

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Why yo-yo financing is not the same as spot delivery<\/h3>\n

Spot delivery gets a bad name not just because some dealerships abuse it, but because others are under the impression that the terms \u201cspot delivery\u201d and \u201cyo-yo financing\u201d can be used interchangeably. Yo-yo financing is not spot delivery; yo-yo financing is a spot delivery scam.<\/p>\n

Spot delivery laws vary by state, but typically, if a customer\u2019s financing falls through, they\u2019ll be asked to return the new vehicle and will get their down payment and trade-in back. Or, the dealer will help them figure out an alternative.<\/p>\n

With yo-yo financing, dishonest dealers try to pressure a customer into a different deal, blatantly lie to them, and even threaten to repossess the vehicle or call the police. Any self-respecting dealership owner does not allow his staff to engage in yo-yo financing tactics.<\/p>\n

\"spot<\/p>\n

Keep your spot delivery honest and compliant<\/h3>\n

There are risks when it comes to spot delivery: you may send someone home with a car, and then find out the finance rate you quoted them isn’t approved. You don\u2019t know how that customer will respond to the news, especially if they didn\u2019t completely understand the terms of the contract they signed.<\/p>\n

How can you avoid yo-yo financing and awkward spot delivery situations?<\/p>\n

In 2012, 32 state attorney generals wrote a letter to the FTC in which they requested the\u00a0regulation<\/a>\u00a0of spot delivery. The FTC doesn\u2019t have a formal regulation in place, but the seven suggestions the attorney generals offered are an excellent guide for dealerships who are trying to ensure they\u2019re compliant<\/a>\u00a0and ethical:<\/p>\n