Consumers:
Consumer Protection > Vehicles > Yo-Yo Sales: When the Dealer Changes the Terms
A law passed in 2005 gives Arkansas consumers new rights to cancel a vehicle purchase if the seller changes the terms of the sale. The new law applies to both new and used car dealers and is designed to make sure the financing terms of a vehicle sale don't change after the buyer leaves the lot.
When consumers purchase a car or truck, they are often anxious
to drive away as soon as they pick out a vehicle. However, when
the financing is not finalized before that vehicle leaves the lot,
consumers may be left in a position to return later and sign a
more expensive financing plan. Attorney General McDaniel always recommends
that buyers do not take a vehicle off the lot until the financing
is final and all paperwork is signed by both parties. Otherwise,
buyers may find themselves paying more money than they expected
for their new vehicle. Increased costs and fees can occur when
customers do not have strong enough credit to qualify for the most
attractive financing offers, but it can also result from questionable
practices by a seller.
Releasing a vehicle with only an oral contract or an incomplete
written contract, knowing that the finance terms will likely change,
is often called a " spot delivery" or " yo-yo" sale.
The new Arkansas law will add more protection for consumers in
those situations.
Act 1687 of 2005 establishes stricter procedures to better protect buyers of new-or-used vehicles. Under the new law, if a dealer suggests that a buyer take early possession, the dealer must notify the buyer that the deal is not final and the buyer has the right to cancel the sale without penalty if the terms change. A document must be signed by both the seller and the buyer containing all the anticipated terms of the agreement. While the terms are pending, the dealer cannot deposit the buyer' s down payment, and cannot re-sell a trade-in vehicle exchanged in the deal. If any of the terms change, the buyer has the right to cancel the deal with no charge or penalty.
" The buyer still has the responsibility to carefully inspect all documents when buying a vehicle," McDaniel said. " This new law helps protect the rights of the consumer by giving them more options if the terms of a sale change before it is finalized. The best move is still to make sure that all documents are reviewed, signed and copies are obtained before the vehicle is driven off the lot."
Contact Us
Consumer Protection Division
501-682-2341
800-482-8982 (statewide)
501-682-8118 (fax)
consumer@arkansasag.gov
