« Go Back

August 21, 2013

LITTLE ROCK – Naturally, most car buyers want to drive their new purchases off the lot as soon as they can. Often, this comes well before buyers receive approved  financing paperwork necessary to complete automobile purchases.

While it may seem like a good idea to take possession of a vehicle immediately, there are some risks to doing so. For instance, the agreed-to financing terms may not always be the final terms offered by the dealer or the lender. The instances in which those financing terms change are called “yo-yo” sales.

Arkansas law offers consumers protection in the event of a yo-yo sale, thus Attorney General Dustin McDaniel issued this consumer alert today to inform consumers about their rights in that circumstance.

“One common car-related complaint to our Consumer Protection Division involves yo-yo sales,” McDaniel said. “A car buyer may take possession of a car for a few days or a weekend, and think they have no choice but to complete the sale if the terms have changed significantly. Though the best option is to not take possession of a vehicle until the sale is complete, consumers have the right to walk away from any yo-yo sale.”

Car buyers who have already obtained financing through a bank or credit union may be in a position to immediately complete a purchase. Chances are, though, that consumers applying for financing through the dealer may have to wait a few days to receive financing approval through the dealer’s finance company.

In some cases, the financing rate or other major loan terms agreed to by the consumer may not be approved by the financing company. The dealer may choose to offer different financing terms, such as a higher interest rate or a larger down payment, in order to complete the sale.

During the time before the sale was final, a consumer may have put dozens or hundreds of miles on the vehicle. Sometimes, the dealer may have already illegally sold the buyer’s trade-in vehicle.

However, Arkansas law gives consumers an absolute right to cancel a new- or used-car purchase if the seller changes the terms of the sale.

If the car dealer offers the opportunity for a consumer to take possession of a vehicle before financing has been approved, the dealer is required by law to notify the consumer that the deal is not final and that the buyer has the right to cancel the sale without penalty if the terms change.

Both buyer and seller are required to sign a document stating the anticipated terms of the agreement. While those terms are pending, the seller is not allowed to deposit a down payment or resell a trade-in vehicle exchanged in the deal.

If a consumer decides to terminate a yo-yo sale, the buyer must return the new vehicle to the dealer. The dealer must return the trade-in vehicle and any down payment that the buyer may have made. Sellers are prohibited from charging buyers for miles put on the vehicle while in the buyer’s possession.

To avoid any potential for a yo-yo sale, McDaniel recommended that buyers not take possession of an automobile until all financing is final and paperwork is complete.

For more information about yo-yo sales or other consumer-related issues, contact the Attorney General’s Consumer Protection Division at (800) 482-8982, or visit the division’s website,