Podcast Summary
Beware of yo yo sales in car buying: Buyers can unknowingly return their cars due to financing issues in yo yo sales, leaving them confused and out of pocket.
Car buyers can unknowingly fall victim to yo yo sales, a shady practice where dealerships reclaim possession of a sold vehicle due to financing issues. The Johnson family, who recently had a baby, learned this the hard way when they bought a used Hyundai SUV, only to receive a call three weeks later that the financing had fallen through, and they had to sign a new contract with different terms. This practice, which is not uncommon, leaves buyers confused and out of pocket. Despite believing they have legally purchased the car, they can be asked to return it. The BBC, a NPR sponsor, encourages listeners to seek information and inspiration to navigate such complex situations.
Yo yo sales: Deceptive practices by car dealerships: Consumers must be cautious of car dealerships using yo yo sales tactics, which involve canceling initial deals and offering new contracts with unfavorable terms, potentially leading to consumers paying more or losing their trade-ins.
Some car dealerships use deceptive practices, known as "yo yo sales," to manipulate consumers into signing new contracts with different terms. These dealerships may cancel initial deals due to financing issues and attempt to get consumers to agree to new contracts with higher prices, lower trade-ins, and removed incentives. If consumers refuse, the dealerships may repossess the cars. This was the experience of the Johnsons, who lost their car after refusing to sign a new contract. These practices are not only dishonest but also potentially damaging to consumers, who may end up paying more for their cars or losing their trade-ins. Consumers should be aware of these tactics and carefully review all contracts before signing. If they suspect they have been a victim of a yo yo sale, they should consult with a consumer attorney.
Beware of dealership loan agreements: Buyers may face repossession if dealers can't sell their loan, emphasizing the importance of understanding terms and affordability before signing.
Car buyers need to be cautious when financing a vehicle through a dealership. Dealers may agree to lower monthly payments to sell cars quickly, but they might not be able to find a lender to buy the loan. If this happens, the dealer can reclaim the vehicle, leaving the buyer without a car and responsible for the loan. This situation, as shared in the NPR story about the Johnsons, is not uncommon. Dealers want to appear bound by the contract but have the ability to walk away. Buyers should be aware of this fine print and ensure they can afford the potential higher interest rates before signing the contract. It's crucial to ask questions and fully understand the terms before agreeing to a car purchase.
Yo yo car sales: A contentious issue: The FTC is considering new rules to address yo yo car sales following concerns from consumer advocates and attorneys general. Critics argue these sales can lead to negative outcomes, while the industry maintains the current system is sufficient.
The practice of yo yo car sales, where dealers reclaim vehicles after consumers have driven them off the lot, remains a contentious issue. The Federal Trade Commission (FTC) is considering new rules to address this issue following concerns from consumer advocates and 18 attorneys general. While the National Automobile Dealers Association argues that these sales contracts, which allow dealers to cancel sales, are standard and beneficial, critics claim they can lead to negative outcomes such as dealers reporting stolen cars when buyers refuse to return them. The FTC is seeking public comment on whether to create specific rules to tackle this issue, with consumer advocates and attorneys general urging action. The industry, however, maintains that the current system is sufficient and that the focus should be on enforcing existing laws. Despite the ongoing debate, it's clear that yo yo sales can have serious consequences for consumers.
Protecting Consumers from Yo Yo Sales Scams: Maryland's four-day waiting period law reduces yo yo sales scams, emphasizing the importance of consumer protection and legal awareness when buying used cars.
Used car buyers, especially those in certain jurisdictions, may face the risk of being ensnared in "yo yo" sales scams, where dealers attempt to reclaim sold vehicles. These situations can lead to legal issues, arrests, and even wrongful imprisonment. To combat this issue, Maryland passed a law mandating a four-day waiting period before a car sale can be finalized, significantly reducing yoyo sales complaints in the state. As consumers, it's essential to be aware of this risk and consider purchasing a car from areas with such protective legislation. It's also crucial to ensure all necessary paperwork is in order and to consult legal counsel if faced with such a situation. The stories of Andre Flint and the Johnsons serve as stark reminders of the potential consequences of these scams.
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