After donating a vehicle, many people look into financing the new vehicle they plan to buy to replace their donated car. When you purchase a new or used vehicle from a dealership, chances are they will offer you some type of financing for the vehicle. While financing is a good option for many people, there are some offers to be wary of.
One financing trick dealers sometimes use is called “spot delivery” or “yo-yo financing.” In this situation, a person who is buying a vehicle from a dealer will be offered financing before the bank has approved the loan. This way, the buyer takes possession of the vehicle right away. Then, the dealer contacts the donor after several days to let them know that there were problems with the financing and dealer will often demand a higher payment and higher interest rates on the loan.
Many dealers need to use “spot delivery” financing in order to allow customers to purchase vehicles in the evenings and on weekends when banks are closed and unable to review the application for financing. However, the problems arise when applications are denied and the dealer contacts the customer to make new demands.
For example, the dealer may call the customer and tell them they must agree to a new financing plan or the car will be repossessed or reported stolen. If the customer asks to simply return the vehicle rather than agree to the new terms, the dealer may demand they the customer pay extremely high fees for “renting” the car and “damage” that may have occurred during their possession of the vehicle.
So, when you are shopping for a new vehicle after you have donated your vehicle to Goodwill, be careful about driving off in a financed vehicle before you have carefully reviewed your contract and seen the approval letter from the finance company.