Re-contracting can have a bad effect on customer satisfaction. It's also a hot button for federal regulators, including the Consumer Financial Protection Bureau and the Federal Trade Commission, cheered on by consumer advocate groups and their supporters in Congress.
In particular, auto finance industry critics have latched on to the term "yo-yo financing" to describe the case in which a dealership purposely makes a spot delivery at unrealistic terms, knowing the deal won't get approved. The idea is to squeeze more money out of the customer the second time around. To some critics, "yo-yo financing" means practically the same thing as spot delivery.
The term crops up often, including in an editorial last month in The New York Times entitled "When a car loan means bankruptcy."
"One of the more egregious tactics is the 'yo-yo,' in which the buyer drives away believing that the deal has been closed, only to be summoned back days or weeks later and told that original deal has fallen through and that he or she must either surrender the car or accept a higher interest rate and terms that are much less advantageous," the editorial said.
The National Automobile Dealers Association says there's no evidence that yo-yo financing is as common as consumer advocates seem to think.
"We are not aware of any credible evidence which indicates that fraudulent 'yo-yo' transactions are prevalent in today's marketplace and none was presented to the Federal Trade Commission when it thoroughly examined this issue during a series of motor vehicle roundtables in 2011," NADA told Automotive News in a written statement.
Anecdotally, F&I managers and industry experts say spot deliveries for the most part account for a minority of deals, and rewriting contracts accounts for a smaller subset within spot deliveries.
Adam Marburger, finance director for AutoCenters Nissan in Wood River, Ill., said spot delivery isn't his first choice.
"I like deals clean. I like a solidified deal," he told Automotive News.
Nevertheless, he said the dealership is aggressive about getting as many customers as possible in cars while they are at the dealership. He said the dealership does about 20 percent of its volume as spot deliveries, often because of late-night deals.
It's an easy call for prime-risk customers but less easy for customers with subprime credit, he said. The dealership sells about 200 vehicles a month, roughly 50-50 between new and used, he said.
"If somebody is credit-challenged and it's 8:30 or 9 at night -- and you'd be surprised how often it's 8:30 or 9 at night, and then it's even later when you're doing the paperwork, we're one of those stores, we're busy late at night -- if they have a substantial down payment you can sign them," he said.
"But with subprime, it's definitely more kind of deal-by-deal."
Out of 20 percent spot deliveries, Marburger said he averages fewer than one rewritten contract a month.