The Spot Delivery Car Dealer Scam Explained

The spot delivery car dealer scam is very common in car dealerships across the country.

The spot delivery scam is also known in the industry as the “financing fell through scam,” “resign documents scam,” or “yo-yo financing scam.”

This scam involves when a dealer sells a vehicle “on the spot” to buyers, hence the name.  This dealer tactic is one of the most common car dealer scams in dealerships across the nation.

What is a Spot Delivery?

Spot delivery is when a car dealer does not officially have a customer approved for a car loan. The dealer will have the customer sign all the paperwork and take delivery of the car. Leading the customer to believe their loan is approved and the car deal is complete.

The spot delivery can be emotionally devastating because of the way it works. It leads you to believe you have just bought a car, and two weeks later, the dealer calls you and tells you to bring the car back.

After you’ve agreed to purchase a vehicle and a price, The sales manager will give your information to the finance office.

The finance manager will look at your credit history, financial information, vehicle information, and all the details of the car deal.

He will then assume which lender will approve you and at what interest rate and term. He will then have you sign the contract and paperwork at what he believes he can get your loan approved for at a later time.

Once the paperwork is signed and you believe you’ve bought a vehicle, the dealer will allow you to take delivery of the car so you can drive it home and show it off to your family and friends.
You are oblivious that you’re not officially approved for the loan, and the dealer will not tell you otherwise.

Dealer’s spot deliver customers to take them out of the market. Spot delivering a customer gives the dealer the first shot at selling them a car without worrying about the customer going to several different dealerships and losing the car sale to a competitor.

Most spot deliveries usually happen during the weekend or later in the evenings, when most banks and lenders have gone home for the day.

If there are any particular circumstances with the individual’s credit or the car deal, the F&I manager cannot rehash (discuss) the deal with anyone at the lender.

Although the customer is not officially approved for financing, he will have to make a judgment call to spot-deliver the vehicle and rehash the deal with the bank later.

The customer believes they’ve been approved for the loan, will sign all the paperwork, and are allowed to take the vehicle home.

Not All Spot Deliveries Are Scams

First, I would like to state that not all spot deliveries are considered scams, and not all dealership personnel should be regarded as deceptive. Spot delivering a vehicle to a customer is an everyday process at car dealerships nationwide.

A car dealer understands if you’re in the market to buy a car, approved for the car or not, they better have you sign all the paperwork. If they don’t sign you up now, the following car dealership you visit WILL.

The spot delivery process is where many car dealership horror stories originate. When a dealer leads you to believe you’ve bought a car and then calls you a few days, or even weeks later, telling you to bring the car back. It can be not very pleasant.

You may know someone this has happened to or have experienced this yourself. It’s a horrible feeling, dealers realize you’ve already shown everyone in the world your new car, and they hope you’ll do anything to keep it and not want to give it back due to embarrassment.

Sometimes a spot delivery can genuinely be an accident. A finance manager makes a bad call and signs an unsuspecting customer up at the wrong interest rate or term. This usually happens with customers with less than perfect credit.

A good F&I manager does everything in his power to get the deal approved before he commits to spot delivery; after all, he doesn’t get paid if he doesn’t get the deal done, and he is usually the one that has to make the call to get the car back from you.

Sometimes the lender won’t approve the loan at the rate or terms you signed, for whatever reason. If the finance manager truly missed something on your credit bureau and cannot get the deal approved, although not a good experience for you, it wouldn’t be classified as a scam.

When a Spot Delivery Becomes a Scam

A spot delivery becomes a scam when the dealer tells you you’re approved for a car loan at a specific interest rate and term. However, he knows there is NO WAY you will qualify for the loan as written.

The dealer will even go as far as having you sign all the paperwork and let you take delivery of the vehicle to take you out of the market.

Believing you just bought a vehicle, you will no longer be shopping for cars, giving the dealer the first shot at your business. The dealer also counts on you to fall in love with the vehicle, develop an emotional attachment, and show the car off to all your friends and family.

Meanwhile, you spend a few days or weeks traveling in the automobile under the impression that it is yours. The dealer is hard at work trying to get your auto loan approved.

Most legitimate finance managers work hard and do their best to get the deal approved as it was written, but most of the time, it doesn’t work that way, and sometimes they’re lucky even to get the deal approved.

When the dealer let you take the vehicle, he knew they would be contacting you again shortly. You may get a phone call, “there was a problem with your deal, and we need you to come back and resign,” or “I’m sorry, your financing fell through.” This is a horrible phone call, and they make them every day.

Many people drive a car for weeks before getting this phone call. There are instances where consumers were required to return to the dealer after driving brand-new vehicles for months because “there was a mistake with their documentation.” This happens all the time in the retail car sales industry, don’t think it can’t happen to you.

When you get to the dealership, they’ll try to take advantage of your sentimental bond, especially if you want to keep the car. No matter how kind or smooth they seem, remember that they have a motive for calling you back in and a purpose for doing so.

This is when they’ll try and hammer on you to sign at a higher interest rate, longer-term, switch cars, or put more money down. The sad part is that this technique works on many people; they’ll do about anything to keep the vehicle and avoid embarrassment with their friends and family.

The worst-case scenario is when you’ve been driving the car for two weeks and get the call because the dealer can’t get you approved. If you have a trade, it can be even worse. Some dealerships have it written in their paperwork that all they have to do is give you the actual cash value of your trade.

If they happen to have sold your trade, all they have to do is give you the ACV in the form of a check. So, you could be left without a vehicle at all. This is a rare occasion, but it does happen.

Most dealerships are good about putting a “Trade-Hold” designation on a car if the deal is not approved.

Example Calls From a Dealer Asking for You to Return to the Dealership

This is not a phone call the finance manager wants to make or you wish to receive.  However, these calls done when they cannot fulfill the terms they had you sign while you were at the dealership buying the car.

Example calls from a dealer to bring the vehicle back:

  • We need more money down.
  • Your interest rate is going up.
  • We have a better deal for you, come in, and we’ll tell you about it.
  • You must resign your paperwork.
  • We forgot a couple of forms for you to sign.
  • You must switch to a cheaper vehicle.
  • You need a cosigner if you want to keep the car.
  • Your financing fell through.
  • We can’t get you approved for the total amount of the loan.
  • We cannot get you approved for financing.

How the Spot Delivery Scam Works

After signing the contract and all the paperwork for the car you are buying, the dealer will let you take delivery of the car and drive it home, unaware the terms and conditions do not officially approve you of the car loan you’ve agreed to.

You go about your everyday life and show your new car to your family, friends, and co-workers. About a week later, the dealer calls you (usually the finance manager) and tells you, “I’m sorry, the bank did not approve your car loan as written.” “You must return to the dealership and resign paperwork according to the bank’s approval to keep your vehicle.”

Sometimes the F&I manager will call the customer back and tell them whatever they can to get you to come back to the dealership. They usually tell you they forgot a paper for you to sign. To make matters worse, this is typically a week or two later after the customer has shown everyone their new car.

Once the customer is back at the dealership, the devastation begins. The F&I manager will tell you he couldn’t get your car loan approved at the agreed terms you already signed, and your payment is now higher, the interest rate has gone up, you need more money down, and/, or you have to buy a different car, or you can’t buy a car at all.

Now your emotions have kicked in; at least, this is what the dealer hopes. The pressure has increased, you’re in love with the car, and your family and friends have already seen it.

You are now at a considerable disadvantage, you can succumb to what the finance manager offers you, or you can try to get your money and trade back and GET UP AND WALKOUT! I would do the second option. The dealer that does this to a customer gives all dealers a bad name.

The customer is usually agitated at this point. Car dealers have been doing “spot deliveries” for a long time and are very good at covering themselves legally. Most car dealers include a “Right of Recession” agreement with their paperwork. It’s a basic form that the customer will sign that says for any reason, if the dealer cannot get the car loan approved, you must return the car.

Another form they may use is a “BCA” (Borrowed Car Agreement). They’ll use a BCA to supersede the contract if they don’t get your auto loan approved. This is another reason you must read everything you sign. As a customer, you can try and fight the car dealer if you do not want to return the car. However, this may be a long and costly fight.

Every car dealer I’ve ever been associated with has spot-delivered customers.

In my 20+ years in the car business, I have never seen a customer (not approved) win a lawsuit, or get to keep a vehicle because of being spot delivered.

You should always file a complaint against the car dealer with the BBB and the appropriate State’s Attorney General. If they get enough complaints about a dealer, they’ll do an investigation.

What if the Dealer Wants the Car Back?

If you just bought your car and the car dealer called you a few days later to tell you your financing fell through, or you need another $2,000 down to keep the vehicle. You could be the subject of the spot delivery scam. If the car dealer keeps calling and harassing you to bring the car back, you still have a few options.

How to increase your chances of keeping the car:

If you believe you received a reasonable price and want to keep the car. Apply for an online auto loan with a reputable company such as myAutoloan. This company will send you up to four quotes for free, with no obligation on your part. They will let you know within minutes if they can help.

These companies are secure and will not play games with you. Once approved, they’ll send you a check immediately. You can then take your approval check to the car dealership and not have to worry about having to give the vehicle back.

Read my section on how to get free car loan quotes online to learn about online auto finance companies and how they work.

If the dealer demands you bring the car back because they couldn’t get your loan approved because of a bad credit situation. Get approved through one of our recommended companies specializing in bad credit auto loans and see what they can do for you. There is no obligation, and you will know exactly where you stand when financing an automobile.

If the dealer tries to force you to resign paperwork through their in-house financing sources and requires more money down or your payment is going up for any reason, refuse to sign. Don’t let your pride get in the way. This is your chance to get out of the car deal, refocus, and start again.

A dealer cannot legally force you to sign at a higher rate or payment. They will try to use your emotions and manipulation tactics against you to get you to re-sign the contract. Once you have signed the paperwork and the dealer has you approved with a lender, you cannot return the car, so make sure you commit to an arrangement you are happy with.

If you don’t want to re-sign the paperwork on the car, DON’T DO IT!

There are many car dealerships out there doing business, honestly. Getting wrapped up in emotions when buying a car is one of the most costly mistakes. Cars are made of metal, and the manufacturers will produce more.

Take your time and make good buying decisions when purchasing your next automobile.

How to Avoid the Spot Delivery Scam

The best way to avoid the spot delivery scam is to only use a car dealership’s financing as a last resort. Find out what you qualify for before contacting a dealership by arranging your financing beforehand. You will know how much money you can borrow and what interest rate you are eligible for.

You should look the finance manager in the eye and ask them, “Am I approved through the lender to buy this car right now, or are you spot delivering me?”  If the manager says, “yes,” ask them what bank or lender approved your loan. If the finance manager has difficulty giving you a name (or refuses to), they may be lying to you.

There is nothing wrong with spot-delivered as long as the dealer tells you what’s going on upfront. Knowing this information will allow you to decide if you’re comfortable taking the vehicle home or going to another dealership to shop further?

Further Protection From This Dealer Scam

  • Remember that even after signing the contract and all the paperwork, it doesn’t mean you’re officially approved.
  • Don’t let the finance department know more about your credit history than you do. Know your credit history before visiting a car dealership or applying for a car loan. Get and review your credit reports and scores from a reputable online company like MyFreeScoreNow.
  • Use reputable online financing companies like myAutoLoan or Auto Credit Express to get pre-approved. You can use the free loan quotes from these companies as leverage against a dealership’s finance department. You can also apply for a bad credit auto loan online to get pre-approved before contacting a dealership.
  • You can still be a victim of the spot delivery scam when trying to lease a new car.
  • Ask the F&I manager if you are officially approved or are being “spot delivered?”
  • Make sure you get copies of all your paperwork. Dealers do not like to give copies if being spot delivered (they mail them).
  • Ask to see the approval from the lender (they may say it’s confidential). That’s a LIE!
  • If you know you have questionable credit, and they tell you you’re approved for 3.9%, you’re probably being spot delivered.
  • Do not take delivery of the vehicle until you receive it in writing that you are officially approved for the auto loan.
  • Never use cash or a check to give a car dealer a down payment. Always put your down payment on a credit card.
  • Check if a “Borrowed Car Agreement” or “Borrowed Vehicle Agreement” is included with your final paperwork…If so, you’ve most likely been spot delivered.

About the author
Carlton Wolf is the author and founder of Auto Cheat Sheet.My name is Carlton Wolf, and I’ve been in the car business since 1994, both retail and wholesale. I created the Auto Cheat Sheet to better educate buyers about the deceptive sales practices used by many dealerships throughout the country. Please understand that not all car dealers are dishonest. However, you never know who you’ll be dealing with, though. I’m willing to share my knowledge and experience with anyone who listens. Keep in mind that I’m a car guy, not a writer.