{"id":4734,"date":"2026-03-06T11:37:31","date_gmt":"2026-03-06T11:37:31","guid":{"rendered":"http:\/\/ft365.org\/index.php\/2026\/03\/06\/yo-yo-financing-the-shady-lending-tactic-that-can-cost-you-your-car-even-if-you-make-every-payment-bankrate\/"},"modified":"2026-03-06T11:37:31","modified_gmt":"2026-03-06T11:37:31","slug":"yo-yo-financing-the-shady-lending-tactic-that-can-cost-you-your-car-even-if-you-make-every-payment-bankrate","status":"publish","type":"post","link":"https:\/\/ft365.org\/index.php\/2026\/03\/06\/yo-yo-financing-the-shady-lending-tactic-that-can-cost-you-your-car-even-if-you-make-every-payment-bankrate\/","title":{"rendered":"Yo-Yo Financing: The Shady Lending Tactic That Can Cost You Your Car Even If You Make Every Payment | Bankrate"},"content":{"rendered":"
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Marklyn Johnson drove to the grocery store in March 2025 with her boyfriend and 5-month-old son. They needed groceries, and welcomed a warm indoor diversion on a cold Connecticut winter day.\u00a0<\/p>\n

As they were checking out at the register, Johnson looked out the window and noticed her car was gone.<\/p>\n

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\u201cI didn\u2019t know what to do,\u201d says Johnson. \u201cI didn\u2019t know what to say, I didn\u2019t know who to call.\u201d<\/p>\n

Turns out, according to Johnson\u2019s legal complaint in Hartford\u2019s superior court, the used car dealership that sold her the vehicle two months earlier had decided to repossess it at that very inopportune time \u2014 even though she hadn\u2019t missed a single payment.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n

Unfortunately, Johnson\u2019s story is one of many. Bankrate has interviewed consumer protection lawyers across five states who are representing clients in similar, ongoing cases. One lawyer called them \u201crampant.\u201d Some aren\u2019t simple repossessions either, especially when the dealer or its auto financing partner involves the police by reporting a car as stolen if the consumer doesn\u2019t return it promptly.<\/p>\n

Sparky Abraham, a California-based attorney, says one of his clients never expected her car repossession story to end in handcuffs.<\/p>\n

\u201cI\u2019m not at a place with the latest [case] yet that I can say a lot,\u201d says Abraham, \u201cbut I will say, [my client] took a video of herself getting arrested, and there are guns pointed in her face, like for buying a car, you know?\u201d<\/p>\n

Like that woman, what happened to Johnson started out simply as \u201cyo-yo financing\u201d: Her dealer guaranteed loan approval and, five days after the sale was \u201cfinalized,\u201d started texting and calling her to say it fell through. She was given a choice before the repossession: Either return the car or succumb to less attractive loan terms.<\/p>\n

Most consumers, when confronted, want the car they\u2019ve already started driving and \u201ceat the difference and sign a new contract,\u201d says lawyer Bryce Bell, a consumer attorney in Kansas City. Other consumers simply aren\u2019t aware of their legal rights. That means only a fraction of these bait-and-switch cases are actually litigated.<\/p>\n

As part of Bankrate\u2019s ongoing effort to shed light on predatory financial practices, yo-yo financing seems worthy of spotlighting.<\/p>\n

Johnson \u2018wasn\u2019t prepared for what was to happen next\u2019<\/h2>\n

Johnson, 23, and her now-14-month-old son needed a car for the same reasons we all need wheels: to get to and from doctor\u2019s appointments, work and so on. So, when she tired of borrowing her parents\u2019 car, Johnson sought out something affordable, zeroing in on a 2017 Acura ILX listed by Hartford Auto for $13,999. The used car dealer claimed to offer \u201cguaranteed\u201d approval, according to the legal complaint, but to seal the deal, asked Johnson to increase her initial down payment from $1,500 to $3,200.<\/p>\n

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\u201cKnowing that it was in my name, that I just bought it, that it was \u2018new,\u2019 there was nothing wrong with it \u2014 I was so excited,\u201d says Johnson, who\u2019s currently pursuing a nursing career. \u201cAnd then, knowing that my baby had a car, everything was just falling into place.\u201d<\/p>\n

Things fell apart about five days after she drove the Acura off the lot. Texts and calls from the dealer saying \u201cshe needed to sign new financing documents because there were issues with [financing partner] Winthrop Financial accepting the loan,\u201d the complaint reads.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n

\u201cI\u2019m not going to lie\u2026 my heart did drop,\u201d Johnson recalls. \u201cI already signed the contract, I already did what I needed to do\u2026 I wasn\u2019t prepared for what was to happen next.\u201d<\/p>\n

Related: <\/strong>Car repossessions are up 43%. Here\u2019s what to do if it happens to you<\/p>\n

Two months later, in the grocery store parking lot, Johnson found herself without a car altogether and the immediate concern of how to get home. She remembers an Uber driver allowing her toddler to get into the car without the base for his car seat.<\/p>\n

It was left in the Acura that had just been towed away.<\/p>\n

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Read Johnson\u2019s full legal complaint.<\/em><\/p>\n

Yo-yo financing made possible by one-sided auto purchase contracts<\/h2>\n

Yo-yo financing is what it sounds like. Imagine yourself experiencing the high of driving off the lot and the low of being summoned back, perhaps to make a bigger down payment or face a higher interest rate. In the days between, you might have shown off your new ride to family and friends, perhaps upended your budget to make the math work.<\/p>\n

\u201cYou\u2019re really invested, and it\u2019s hard for people then to say, \u2018no, I\u2019m not going to pay another $2,000 down or whatever it is the [dealer\u2019s] asking,\u2019\u201d says National Consumer Law Center (NCLC) senior attorney John Van Alst. \u201cSometimes, in the most egregious cases, this is done as a technique: [Dealers] haven\u2019t even checked with other finance companies they\u2019re trying to assign the retail installment sales contract to \u2014 they\u2019re just doing this as a way to get you to agree to more onerous terms.\u201d<\/p>\n

Believe it or not, yo-yo financing in and of itself (before the renegotiation or repossession) is perfectly legal, as each state gives dealers a certain number of days to finalize financing after the buyer has signed their paperwork. It\u2019s four days in Washington, for instance, but 10 in California. If the dealer can\u2019t secure financing, it can cancel the contract within that window.<\/p>\n

That\u2019s despite the efforts of the NCLC and the National Association of Consumer Advocates (NACA) to lobby the FTC for something simple and uniform.<\/p>\n

\u201cIt doesn\u2019t even have to be highly regulated,\u201d agrees NACA senior policy director Christine Hines. \u201cIt just means the contract is a final contract \u2014 there shouldn\u2019t be any conditions on it that [harm] a consumer\u2026 because the dealer doesn\u2019t know how to conduct a transaction.\u201d<\/p>\n

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The dealers sure want [transactions] to be final for the consumer \u2014 they don’t want the consumer to be able to change their mind later, but they love trying to enable the dealer to change their mind after the fact. It’s a little bit of what’s good for the goose is good for the gander.<\/q> \u2014 John W. Van Alst, NCLC senior attorney <\/cite> <\/p><\/blockquote><\/div>\n

Also known as bushing or spot-delivery scams, yo-yo financing can be even more troublesome for buyers who financed a new car by trading in their older model. In such cases, a dealer might sell your trade-in before it calls you back to renegotiate your loan.<\/p>\n

Bankrate has reported on the fact that car dealers have been exempt from federal oversight since the dawn of the Consumer Financial Protection Bureau \u2014 the CFPB\u2019s recent sidelining has little do with it. There\u2019s also the fact that where you live determines how protected you might be from auto retail scams: Regulators in your state may be more motivated than their peers elsewhere.<\/p>\n

Related: <\/strong>Predatory auto loans are legal, and some dealers are offering them to unknowing consumers<\/p>\n

But another unfortunate reality is that yo-yo financing appears to occur nationwide. And it\u2019s just as befuddling for the professionals who litigate these cases everyday. Bell, the Missouri-based lawyer, wonders why buying a car seems to be the only transaction where the seller can change its mind after the contract\u2019s been signed.<\/p>\n

\u201cIf you\u2019re an honest dealership, and an honest business, why wouldn\u2019t you want that deal finalized for the consumer?\u201d Bell asks.<\/p>\n

Like other matters in life, follow the incentives, Bell adds. If a car salesman is incentivized, perhaps by commissions, to get a buyer to leave the lot inside of a car, they might push the envelope to do it. And without federal regulation (or enforcement), dealers are free to let these mistakes (or sometimes malicious behavior) happen.<\/p>\n

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Eighteen state attorneys general <\/em>wrote to the FTC in 2022<\/em> asking it to \u201cgo farther to prevent this unfair and deceptive practice.\u201d The <\/em>FTC\u2019s ill-fated attempts<\/em> to solve for yo-yo financing and other auto fraud was beaten back by the courts in January 2024.<\/em><\/p>\n<\/p><\/div>\n<\/p><\/div>\n

How dealers handle failed yo-yo financing cases like Johnson\u2019s \u2014 and how law enforcement handles the fallout \u2014 also depends on where you live. But the police precinct might matter more than your state. Abraham, the California lawyer, says he has worked on a pair of southern California cases involving police departments in close proximity: One department treated it as a civil dispute, another acted as if it was a criminal matter and arrested the car buyer.<\/p>\n

\u201cThese are neighboring jurisdictions, right?\u201d says Abraham. \u201cThis is Anaheim Police Department, Pomona Police Department. This is LAPD and Beverly Hills PD, right?\u201d<\/p>\n

And if the dealership reports a car as stolen, perhaps because they can\u2019t find it as easily as Hartford Auto found Johnson\u2019s Acura at Aldi\u2019s, the value of the car could mean the buyer faces felony-level charges.<\/p>\n

What to do if you find yourself in Johnson\u2019s shoes<\/h2>\n

Get everything in writing. That\u2019s the go-to advice of the consumer protection lawyers interviewed by Bankrate. Then you have a record of what the dealer is doing and when, and can prove that yo-yo financing, while legal, led to something that isn\u2019t.<\/p>\n

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Your best defenses are to read and retain all documents. Be especially wary of conditional delivery agreements. Instead of driving off the lot right away, make sure all aspects of the transaction are finalized, even if that means waiting a few days to pick up the car.<\/q> \u2014 Ted Rossman, Bankrate’s senior industry analyst <\/cite> <\/p><\/blockquote><\/div>\n

In Johnson\u2019s case, her complaint alleges that Hartford Auto violated Connecticut statutes for not providing, for example, pre- or post-repossession notices, including her 60-day right to retrieve her personal belongings (such as the base for her son\u2019s car seat). It similarly didn\u2019t share its intent to resell the Acura (which it did last August). The complaint also says Hartford Auto violated the Connecticut Unfair Trade Practices Act for, among other things, misrepresenting that Johnson would be \u2014 and was \u2014 approved for financing. While she never recovered her $3,200 down payment, she\u2019s now seeking more than $15,000 in damages, plus attorney fees.<\/p>\n

Seeking legal help is another smart move, particularly if you need help understanding your rights \u2014 just be mindful that you might not always get a reassuring response. Abraham, for instance, has received calls from prospective clients who relay a commonly-heard threat from a dealership: Bring the car back, or we\u2019ll call the police.<\/em><\/p>\n

\u201cMy advice is, \u2018Look, it [might be] illegal for them to do that. They might still do it, and if they do it, you can call me, and maybe you\u2019ll have a case, and you can sue them for damages. But your life would probably just be better if you\u2026 consider just [returning] the car,\u2019\u201d he says.<\/p>\n

It\u2019s also wise to submit a complaint to the CFPB and the FTC (even if it goes unheard) and your state\u2019s consumer protection office. At the very least, it creates a record of your experience that could result in broader, more meaningful change.<\/p>\n

As for Johnson, her first car-buying experience certainly left a \u201cbad impression.\u201d If she had a redo, she\u2019d do her best to budget and save up for a car, avoiding borrowing \u2014 and car dealer tricks \u2014 altogether.<\/p>\n

\u201cIf I could think back then,\u201d she says, \u201cI probably would just wait, feel like a burden [to my parents] as long as I had to, in order to save up for a car that I could buy outright, that I could call mine at the end of the day.\u201d<\/p>\n

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Marklyn Johnson drove to the grocery store in March 2025 with her boyfriend and 5-month-old son. They needed groceries, and welcomed a warm indoor diversion on a cold Connecticut winter day.\u00a0 As they were checking out at the register, Johnson looked out the window and noticed her car was gone. \u201cI didn\u2019t know what to<\/p>\n","protected":false},"author":2,"featured_media":4735,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-4734","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news"],"featured_image_urls":{"full":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1.png",1280,720,false],"thumbnail":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-150x150.png",150,150,true],"medium":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-300x169.png",300,169,true],"medium_large":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-768x432.png",640,360,true],"large":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-1024x576.png",640,360,true],"1536x1536":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1.png",1280,720,false],"2048x2048":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1.png",1280,720,false],"morenews-featured":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-1024x576.png",1024,576,true],"morenews-large":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-825x575.png",825,575,true],"morenews-medium":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-590x410.png",590,410,true],"crawlomatic_preview_image":["https:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/4734-Header-1-260x146.png",260,146,true]},"author_info":{"display_name":"henry","author_link":"https:\/\/ft365.org\/index.php\/author\/henry\/"},"category_info":"Latest News<\/a>","tag_info":"Latest News","comment_count":"0","_links":{"self":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/4734","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/comments?post=4734"}],"version-history":[{"count":0,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/4734\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media\/4735"}],"wp:attachment":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media?parent=4734"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/categories?post=4734"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/tags?post=4734"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}