Watch Out for 'Yo-Yo' Car Deals

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We've seen it all too often: a consumer with bad credit goes to a dealership and is welcomed with open arms. He's urged to sign the papers that day and take the car home immediately.

But that giddy drive home is only Part One of his car-buying odyssey.

Part Two comes a few days or weeks later when the first payment is due. The consumer gets a phone call. The financing has fallen through because of the consumer's poor credit, the dealer says. The consumer is told to return the car or come in for further negotiations.

Like a yo-yo that's stretched out and snapped back, the embarrassed shopper finds himself back at the dealership and sometimes at a considerable disadvantage.

He's already put down a deposit and fallen in love with the car. He's said goodbye to his trade-in. At this point, it's possible for a car dealer to demand a higher down payment, require new, worse financing terms or steer him toward a cheaper, less desirable car.

The ABC News Fixer has heard of dealers who also tack on charges for the consumer's use of the car before the financing fell through.

Bad credit provides the string for this yo-yo. Consumers should be wary of offers promising that anyone can get financing, even people with bad credit or no credit. These can leave them vulnerable to sky-high loan terms or a yo-yo.

How can you avoid the yo-yo?

Get your credit report and credit score. Then talk to your bank or credit union before you start car shopping. That way you'll know exactly what you can afford and you won't have to rely on the dealer for financing.

If you have a trade-in, try to sell it on your own. At the dealership, you'll want to focus on one thing, and that's the price of the car you're about to buy. Adding a trade-in transaction will only muddy the waters. If you owe more on your trade-in than what it's worth, that's called negative equity, and you should try to pay down that loan before getting a different car. You definitely don't want the dealer to roll that old debt into your new loan.

Even if it's slow going, read every document. Don't rely on verbal promises.

Don't just look at the monthly payments; consider the entire cost to you over the length of the loan.

If you get your loan through the dealership, make sure you ask whether the financing is complete or the sale conditional on getting financing -- before you drive away.

And remember: Despite what you may have heard, there is no three-day right to back out of a vehicle purchase.

For more tips on buying a used car, CLICK HERE.

Got a consumer problem? The ABC News Fixer may be able to help. Click here to submit your problem online. Letters are edited for length and clarity.

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