(May 6, 2012) SANTA MONICA, Calif. — Car shoppers should make sure that their financing deals are completely set before driving away from the dealership in a new or used car, advises Edmunds.com. The recommendation aims to minimize exposure to "yo-yo financing" when a consumer takes possession of a vehicle before the financing process is complete.

If the financing falls through, the dealer can move to repossess the vehicle or pressure the buyer into a revised deal with higher interest rates or a bigger down payment.

"This phenomenon highlights the benefit of having preapproved financing in place before you go car shopping, especially if you're a subprime car buyer," says Edmunds.com Consumer Advice Editor Carroll Lachnit. "You do not want to be faced with an uncomfortable decision of paying more than you originally agreed to pay, or deal with the embarrassment of forfeiting a vehicle that you might have already showed off to family and friends."

Consumer protection agencies have long tried to enact laws against selling cars on the spot (or "spot delivery") before financing is complete. But they've met resistance from dealerships who say that it benefits customers eager to drive off in a car, especially on nights and weekends when banks are not available to approve loan applications.

While "yo-yo financing" is generally frowned upon in the auto industry, there are a handful of unscrupulous dealers who will abuse the practice in order to stick consumers with a higher bill.

Many states have enacted laws governing spot deliveries, but the nuances of those laws vary from state to state. In many cases, the standard sales contract contains language allowing the dealer to request that the car be returned within a certain period of time if financing falls through. Some states, like Illinois, require consumers to return the car to the dealership and require the dealer to return the down payment and/or trade-in to the consumer if the dealership cannot find financing at the rate in the contract. In California, however, the contract says that if the loan is not approved, the buyer may still be responsible to pay the complete balance due.

"Above all else, car buyers should always get every element of their deal in writing," says Lachnit. "Consumers should ask to see a copy of their rates confirmed by the finance company. They should also be wary of signing any 'conditional' boxes in the contract that might allow the dealer to rewrite the contract under different terms."

More detailed information about protecting yourself against spot delivery scams and yo-yo financing can be found on Edmunds.com.