Beware of yo-yo auto loan scams

Before we get into this scam that is apparently widespread nationally (although I have no idea whether it is a problem in the greater Rochester region), I wanted to, again, briefly address the increasing automobile insurance rates that readers are no doubt reading about, and some may already be experiencing. Some reporting asserts that rates are up 15%.

According to progressive.com, "The number of car accidents has gone up both nationally and even more so in certain areas, leading to more insurance claims. This higher claims volume, coupled with higher vehicle repair and replacement costs, is ultimately what's driving insurance rates up throughout the industry."

That being said, even if nothing has otherwise changed with your vehicles or drivers, it is time when you are up for renewal, to really drill down with your insurance agent to address some of these, what I will call "red flags," other than fault, and even in some cases, no-fault accidents. First, as we have discussed in the past, determine if your current credit history and credit score are dragging you down. If so, you need to address this, or understand and accept that this is yet another consequence of a poor financial condition.

Second, again, according to progressive.com, "Violations on your motor vehicle report, especially a DUI or multiple speeding tickets, tell your insurance company that you're more likely to have an accident than a driver with no violations. The more violations you have, the higher your risk to file a claim — resulting in auto rate increases. Even a minor moving violation could increase the cost of your auto policy. Keep in mind that insurance companies won't increase your rate due to a non-moving violation like a parking ticket. Obviously, you want to avoid these, and if you have had some since your last renewal, expect an increase."

Third, there could be factors beyond your control, like moving to a new town in the same area that has a higher rate of claims, or that claims in your state have increased, or becoming 60 or older, even though there may be senior discounts available.

The bottom line is that, in this increasing rate environment, you need to shop around, with your agent, or, alone, if you feel confident that you don't need an agent, and also make sure that you are receiving all available discounts, including, if it is beneficial, a bundling discount.

Let's turn to those yo-yo auto loans, which are illegal, but still happen, so you should be aware of them, and make your friends and family aware.

What is a yo-yo scam? Here is a good narrative from tbreedenlaw.com. "Imagine you just left the car dealership with your new car. You were worried about your credit, but the terms of the agreement you were offered were good. You're excited about your new purchase and you're happy with the deal you made. You've been led to believe the deal is final.

A few days later, you get a call from the dealership. They want to discuss the terms of your agreement. You head back to the dealership only to be told the deal can't go through as originally agreed upon and they try to add new, worse terms. If you don't agree to the new terms, they threaten to take legal action against you if the car is not brought back. They may also tell you that they are unable to refund your down payment or the vehicle you traded in when making the deal.

This situation is referred to as a yo-yo scam, because you are brought back into the dealership as if you're attached to the string of the old-fashioned children's toy."

Here is advice from nizniklaw.com. "Get pre-approved for a car loan from a bank before you begin shopping for a vehicle. Do not tell the dealer about your pre-approval until you settle on a price. You can tell the salesman that you are open to all options. Often, the dealer may lower the price if they believe they can recoup some of their money through the interest on loaning you money. Do not accept a conditional contract – make sure your financing is approved before driving the vehicle off of the lot. Do not 'take the car home' before officially owning the vehicle. If you fall prey to a yo-yo scam, when the dealership calls you to tell you the financing agreement fell through, ask to see the denial letter. You are entitled to it. Sometimes, the dealership will be bluffing and this request will end the matter."

On a different subject that is all over the media is that it's time to move your savings out of low interest rate bank accounts deposits into money market or other significantly higher paying products. I know that I am working with my wealth advisor to do exactly this. The situation is that, even though the Federal Reserve has significantly raised interest rates, and it looks like it will continue to raise them in smaller increments in the short run, brick-and-mortar banks have not significantly raised their interest rates on deposit savings accounts. It's time to be proactive.

On a final subject, we are all conscious of increasing prices, which may be increasing for a variety of reasons. In some cases the provider is, in fact, experiencing increases in its costs. In other cases, I believe some providers are just increasing prices because they can in an environment of increasing prices where we are becoming resigned to and accepting of it. Personally, I was just advised that our cable prices will be increasing. We just discussed auto insurance rate increases in this column, and I have been tracking my increasing utility costs and budgeting in order to be able to pay them when they become due at the end of my budget billing period. I know I have said this a thousand times, but in these times of increasing prices, "You need a budget that you keep visiting and updating."

et billing period. I know I have said this a thousand times, but in these times of increasing prices, " You need a budget that you keep visiting and updating."

John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program.

John Ninfo

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