When a Final Deal is Not Really Final: Conditional Delivery


You finally found the vehicle you wanted to buy….you have done your homework and gotten the price you want…..you have reviewed and signed the mounds of paperwork the salesperson and finance manager have pushed in front of you.  Congratulations on your purchase of that vehicle!  It’s a done deal………….or……..is it?   Hmmm….

Many consumers leave a dealership thinking and being told by the dealership personnel that the transaction is approved and everything is finished.  But too often this is not the case.  Across the country too many consumers’ patience and understanding are imposed upon by vehicle dealers who make conditional delivery of a vehicle but fail to advise the consumer of the same.  The conditional delivery (also known as “spot delivery” or a “yo-yo sale”) occurs where the finality of the purchase or lease transaction is pending further approval.  This “further approval” usually takes the form of the proposed financing terms being accepted by the prospective lender. 

yo yo financingVehicle dealers will sometimes submit rosy or “creative” credit applications in an effort to persuade a lender to agree to finance a vehicle.  This creativity can take many forms:  an enhancement of the consumer’s income, a subtle increase in the consumer’s length of employment, overstatement of how long the consumer has lived at his current residential address, etc.  Once the lender reviews the information in the application along with the interest rate, length of term, and other terms on the proposed financing it is not uncommon for the lender to become suspicious or skeptical and then reject the application.  This means the dealer has to figure out another set of numbers and information that may get the deal financed……..the dealer does not want to lose the potential sale.  If any of the information on the retail installment sales agreement has to be changed the dealer has to contact the consumer and rewrite the deal…but how does the dealer explain the need to call the consumer when the dealer told the consumer the deal was final….uh-oh….

Click here for an excellent recent article on nationwide problems with conditional delivery.  Conditional delivery is legal in North Carolina but must be done in a specific manner.  To make a long story short, the dealer must have the consumer sign a valid conditional delivery agreement and purchase agreement, keep the vehicle on the dealer’s insurance policy (not placed on the consumer’s insurance policy),  and place a dealer plate (not a 30-day tag) on the vehicle.  A dealer’s failure to properly structure a conditional delivery transaction can lead to a big problem for the dealer—-and maybe a good result for the consumer.  If you get a call that your vehicle deal is not final and you believe something is not quite right contact an experienced vehicle law attorney who can review your situation and advise you how to proceed.  Attorney John O’Neal awaits your call if the need should arise….

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