Caught the tail end of a report on a Philadelphia TV station about a car dealer cheating csutomers with a “spot delivery”. I used to be a plaidcoat and never heard of this.
What’s “spot delivery” and what is the scam?
“Spotting a car” is the term used when a car dealer allows the customer, who thinks all is well, to drive the car off the lot before the financing has been approved. If the financing is declined, the customer gets a call from the dealer to either pay in full or return the car and pay a useage/rental fee. The process is covered in the paperwork that the customer signs, but seldom reads.
It’s not really a scam so much as a unsavory, albeit common, business practice. The dealer knows that he stands to lose the sale if the customer doesn’t take immediate delivery. He wants the car and customer to leave together. Telling the customer that the financing is not yet a done deal would increase the chance of the customer deciding to wait to take delivery. Dealers do not want that to happen. I wouldn’t have any objection to this tactic if it were more explicitly disclosed (as some dealers do).
You can avoid this situation altogether by doing one of two things:
- Arrange for financing before you buy. Pre-qualify at your bank or credit union; or
- Refuse to accept delivery of the car until the dealer guarantees, without condition and in writing, that the financing is approved. This may mean waiting an extra day or two for your new car, but it is worth the peace of mind.
The dealership that I worked for sold vehicles which were most attractive to people of, um, dubious incomes: Porsche, Benz, Rover, Audi. Therefore we were extremely careful with spot deliveries and very explicit about our financing. This occasionally caused problems, but the alternatives were far worse.
It was not uncommon for someone to show up and try to put down $9900 in cash (just below the amount required to be reported to the feds) on a Range Rover so that he could drive it off the lot. We frowned on this. After all, if some chap is trying to launder his drug money through the purchase of a flash car, what are the chances that he’s going to give it back once his financing falls through?
That’s not to say that my dealership was honest or ethical–it wasn’t. If memory serves, we did spot a great number of used cars for just under 10K in cash. But those were paid for in full, and therefore did not represent a risk to the sociopathic monster who owned the dealership.
Wow. This must be a new practice. I pushed metal in the early 90s and would have gotten my ass kicked if I let the taillights off the lot without fill financial approval.
I’ll bet the salesmen that sold these spot deliveries really appreciate the chargebacks on their commissions.
What really evil about this practice is that it isnt if the customer isnt approved. The dealer already had the credit report… he already KNOWS what the customer can get approved for and he hands over the keys knowing that the financing will be rejected. Then he calls the customer and says the financing didnt go through and that he (dealer) will have to raise the apr, the payments, will need more money down, or any combantion of those in order for the customer to keep the car. Often the dealer has or claims to have sold the trade in already so the customer cant get their old car back and often feels like they had no choice and argees to the new terms. This bait and switch tactic has been outlawed in Washington (state). Elsewhere you are on your own.
“The dealer already had the credit report… he already KNOWS what the customer can get approved for and he hands over the keys knowing that the financing will be rejected”
I would say that in any state, this would be a breach of the dealer’s obligation of good faith. Although it is always helpful to have a specific statute on your side.