Spot Delivery / Yo-Yo Financing
You drive home, then dealer calls saying "your loan didn't go through." Predatory tactic.
Spot delivery is when the dealer lets you drive the car home before the financing is fully approved. Days or weeks later, the dealer calls saying "your loan didn't go through, we need a higher rate or a bigger down payment." This is sometimes called yo-yo financing and is illegal in some states. Defense: NEVER drive a car home until the loan is fully funded. Wait for the dealer's call confirming "we have the loan." If they pressure you to take it before final approval, walk.
01How to tell if you are being spot delivered
Look at the paperwork for words like conditional, subject to financing, or subject to lender approval. Some dealers use a separate form called a conditional delivery agreement, a rescission agreement, or a bailment agreement. Any of these means the deal is not final and the dealer can try to unwind it.
Ask directly, in writing if you can: Is my financing approved and funded, or is it still pending with the lender? A clear yes from the lender, not the salesperson, is what you want. If the answer is vague, assume the deal is conditional.
02What to do if the dealer says your financing fell through
Stay calm and do not sign anything new on the spot. Ask for the lender's decision in writing, including which lender declined and why. Read your conditional delivery terms, since they usually say what happens if financing is not approved.
In many cases you are allowed to return the car and get your down payment and your trade-in back, rather than accept a worse contract. Do not let anyone tell you that a higher rate or bigger down payment is your only option. If the dealer refuses to return your trade or your money, or claims you owe fees for the days you drove the car, contact your state attorney general's consumer protection office or a consumer attorney. Rules on spot delivery differ by state, so check yours.
Our spot delivery deep dive walks through how these conversations usually go.
03How to avoid yo-yo financing in the first place
The simplest defense is a pre-approval. If you bring your own loan, the lender has already said yes before you sign, and there is nothing for the dealer to claim fell through.
If you do finance through the dealer, ask them to hold the car until the lender confirms funding, even if that takes a few days. Keep your trade-in until the new deal is final. Hand over the keys and title only when the financing is done, because a trade that has already been sold at auction is very hard to get back.
Keep copies of every page you sign, including the buyer's order with the agreed out-the-door price. If the deal gets rewritten, you want proof of the original terms.
04Questions buyers ask
Is spot delivery always a scam?
No. Taking delivery before funding is common, and most of these deals fund without a problem. It becomes a problem when the dealer uses the conditional window to push you into worse terms after you have shown the car to your family and handed over your trade.
Should I keep driving the car if the dealer says the loan fell through?
Read your conditional delivery agreement first, because it usually sets terms for returning the car. If you decide to return it, get a written receipt showing the date, the mileage, and that your down payment and trade-in are being returned.
Can I just sign the new contract if the rate is only a little higher?
You can, but compare it to what your bank or credit union would give you first. A higher rate is a new negotiation, not an obligation. You are not required to accept it.