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National Public Radio (NPR) interviewed multiple car buyers in 2023 who experienced the "yo-yo" – when a car buyer signs papers and takes the car off the lot, only to have the dealership announce later that the financing fell through, the deal is invalid, and the vehicle must be returned or refinanced at a different rate. By this point, the buyers may have sold or traded in their previous vehicle, causing them to feel trapped.
The Federal Trade Commission (FTC) 's CARS rule was finalized in December 2023; the effective date of the CARS Rule has been paused pending judicial review. The rule prohibits motor vehicle dealers from certain deceptive practices related to financing and add-on products.
The Better Business Bureau (BBB) is dedicated to helping preserve "an ethical marketplace where buyers and sellers trust each other" (BBB Mission and Vision). BBB strives to support best practices, and its BBB Accredited Businesses must adhere to the BBB Standards for Trust.
The FTC and the BBB want consumers to have a smooth, honest, and safe transaction when making a significant purchase, such as a new vehicle.
Here are some tips to help you with your car-buying decision:
- Do your research. Check if the dealer is BBB Accredited and read the dealership reviews. Before you go, you should know the make and model you want and if you want a used or a new car. Be sure to check state and province laws before making a final decision.
- Determine financing options. Decide how you plan to finance the car. Before arriving at the dealership, consider looking online at the best deals to stay on a budget that works for you. Ask about their leasing policies to see if they are a good fit. If you decide to do preapprovals, the FTC advises doing only a few since your credit will be pulled each time. If you do online preapprovals, be aware of online safety).
- Visit the dealership. Look at the car before you make a purchase. Visit the dealership in person to see the vehicle and even take the car for a test drive. Check for any exterior or interior damage that the previous owner may not have disclosed. Ask about the history of the car: has it been used? How many owners does the vehicle have? Has it been in any accidents? Before driving off the lot, you must be comfortable with your chosen make and model.
- Negotiate the best rate. Ask questions regarding warranties, trade-ins, service contracts, and other add-on services. Ensure you have a clear understanding of your deal before you sign. If a dealer attempts a yo-yo situation, ask the dealer if they can work with you versus returning the car or paying a higher rate.
- Use secure payment methods. Payment methods such as peer-to-peer payment apps or gift cards are not the most secure since payments cannot be returned. Consider using a credit card that offers protection if you need a refund.
- Be on the lookout for red flags. Always use payment methods that offer security in case of a return. Never do handshake deals; get documentation of everything to ensure your purchase is official. Do not be afraid to walk away if you don't feel comfortable; you do not have to do business with a shady dealer.
- Got a lemon? If you do purchase and feel you have a "lemon" or need to resolve a dispute, contact BBB AUTOLINE.
Purchasing a car is a big decision that can come with many uncertainties. Reviewing tips from the FTC and BBB can help you with your car-buying process. Practice smart shopping online and in person, and always look for businesses that follow BBB Accreditation Standards and BBB Standards for Trust.
For more information
See BBB's auto resources HQ for more auto tips and resources.
Find BBB Accredited new car dealers and used car dealers near you.
Visit BBB's consumer HQ for more consumer news and information.