Research before going to a dealership:

• Work out a budget before shopping for a vehicle so you know the price range and monthly payments you can afford. You should also consider how much money you have available for a down payment and to pay sales tax on the vehicle. Stay within the price range you can afford.
• Get a copy of your credit report so you are aware of what creditors will see. A free copy of your credit report is available at AnnualCreditReport.com. Errors or negative information can impact your ability to get credit as well as your finance rate if you get approved. You should try to correct errors as soon as possible.
• If you have a trade-in vehicle, research its approximate trade-in value.
• Research the vehicles that you are considering for purchase, know their approximate value, and read consumer reviews to find out what other consumers are saying about a particular vehicle. Information can be found in auto buying guides, on the internet, at your bank, and other sources.
• Unless you are able to pay cash, remember that you are shopping for two things — an automobile and financing. Shop for each separately. Compare current finance rates being offered by contacting various banks, credit unions, or other lenders. Compare bank quotes and dealer quotes and know any limitations on the rate, such as if the rate is only available on late-model automobiles.
• You are not restricted to only financing with an automobile dealer. You should also explore other financing options such as local or national banks and credit unions. If you finance through a dealer, request information about the “buy rate” in order to avoid hidden markups.
• Consider whether you will need additional products, such as guaranteed asset protection (“GAP”), extended service contracts, or credit insurance. If you do not want these products, then do not sign for them. If you decide you do need such products, then you can shop for them just like you shop for financing.
• Shop around for the best dealers, lending rates, and insurance providers to avoid businesses with bad reputations.

When visiting a dealership:

• When purchasing a used car, federal law requires that a used-car dealer post a Buyer’s Guide on the window of the car. The purpose of the Buyer’s Guide is to tell consumers if the car is sold “as is” (sold with all defects, known or unknown) or if the car comes with a warranty.
• Always ask for the vehicle’s history report, such as CARFax, before buying it.
• Ask about prior damage. Inquire about any prior damage to the car and its repair history. Do not automatically accept the seller’s response as accurate. In addition, if the vehicle has ever sustained more than 70% damage (“totaled” or “salvaged”), the vehicle title must be branded with a “SALVAGE” and if rebuilt, it must be branded as “REBUILT” and the seller must include a Previous Damage Buyer Notification Form.
• Always test drive the vehicle.
• The seller must give the buyer a written odometer statement disclosing the vehicle’s true mileage at the time of transfer; date of transfer; names and addresses for the buyer and seller; and the vehicle’s make, year, body type, and vehicle identification number. If the seller knows the mileage has exceeded a mechanical limit of 99,999 miles or knows that the mileage is inaccurate, he or she must provide that information to the buyer. It is illegal to disconnect, reset or replace an odometer for the purpose of changing the number of miles.
• If purchasing a used vehicle, ask about arranging for an inspection by an independent mechanic before purchasing.
• Check to see if the car comes with a warranty included in the price of the car. If so, what are the specific protections provided by the dealer or seller. If the seller offers to sell you an extended warranty or service contract, the seller should not be offering the car “as is.” Remember, if you buy a car “as is” and have problems with it, you must pay for any repairs yourself.
• Beware of extended warranties and service contracts. Ask whether the dealer or seller offers an extended warranty or service contract. If you decide to purchase a service contract, make sure you understand what it covers and how long it will last. Shop around for the best price on a service contract.
• Make sure you get any promises made by the dealer or seller in writing (for example, to replace a broken tail light). Verbal promises are difficult to enforce.
• Read the contract carefully before you sign. Do not sign it if it contains any blank spaces.
• Do not feel pressured to make a decision in the moment. Ask to take the paperwork home to review.
• Take a copy of the contract and all documents you signed with you when you leave. You have no right to cancel a car purchase. Contrary to popular misconception, neither State nor federal law gives the buyer an unconditional right to cancel a car purchase.
• If you decide to consider dealer financing, get copies of the financing documents before you sign so that you can comparison shop for financing from other sources.
• If the financing terms change after you take the automobile home, you have the right to walk away from the deal without penalty. This is called a Yo-Yo Sale, which is illegal in Arkansas.

Yo-Yo Sales

Once you have settled on the car you want to buy, it is only natural that you will want to take possession of the car as soon as possible. If you have already obtained approved financing from your bank or credit union, you will be in a position to quickly complete the transaction and take your new car home. However, if you are applying for financing through the dealer, you should be aware that the financing portion of the transaction will probably not be approved by the finance company on the same day you apply. In fact, it may take a few days to receive financing approval.

You may reach an agreement with the dealer to drive your new car off the lot the same day you selected it, even if the financing terms are not final. This may create a problem for some consumers. If the financing rate or other major loan terms you agreed to do not get approved, the dealer may offer different financing terms (such as a higher interest rate or larger down payment) in order to complete the purchase. This is called a “yo-yo” sale. Different financing terms could make the purchase more expensive for you. But, if you have already taken the car and left your trade-in at the dealer, what choice do you have?

Arkansas law provides other options to consumers who do not want to complete the purchase with less favorable financing terms. Arkansas consumers have the right to cancel a vehicle purchase if the seller changes the terms of the sale. The law applies to both new and used car dealers and is designed to make sure the financing terms of a vehicle sale do not change after the buyer leaves the lot with their new vehicle.

If your car dealer suggests that you take possession of your new car before the financing has been approved, the dealer is required to notify you that the deal is not final and that you have the right to cancel the sale without penalty if the terms change. A document must be signed by both the seller and the buyer containing all the anticipated terms of the agreement. While the terms are pending, the dealer cannot deposit your down payment, and cannot resell your trade-in vehicle exchanged in the deal. If any of the financing terms change, you have the right to cancel the deal with no charge or penalty. If you decide to cancel, you must return the car to the dealer and the dealer must give your trade-in back and any down payment you have made. You cannot be charged for the miles you put on the car while it was in your possession.

To avoid a potential yo-yo sale, the Attorney General’s office recommends that buyers not take a vehicle off the lot until the financing is final and all paperwork is signed by both parties. If you are a victim of a yo-yo sale and the dealer does not allow you to cancel the vehicle purchase and return your trade-in and any down payment you made, you may file a complaint with our office.