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If a family member or friend signed a car loan for a vehicle someone else was actually going to own and use, that’s a straw purchase. It violates the dealer’s agreement with the lender, may violate California law, and creates real legal exposure, especially for the person whose name ended up on the loan.
A straw purchase happens when one person with better credit signs the financing for a car that someone else, usually a relative or friend with worse credit, will actually own, use, and pay for. The person who signs the loan is the “straw.” They’re not the real buyer; they appear on the paperwork only so the loan gets approved.
This is different from co-signing. A real co-signer is a known party to the loan, guaranteeing payment alongside the primary borrower. In a straw purchase, the named borrower isn’t a real party to the transaction at all. They exist on paper.
Legally responsible for a loan on a car they don’t own or use. If the actual buyer stops paying, the lender goes after them.
No legal title to a car they paid for, no warranty rights, and no protection if the named borrower takes or sells it.
The transaction violates the dealer’s financing agreement and may expose them to civil and criminal liability.
Title vs. driver mismatch. The car is titled to a different person than the one driving it daily.
Financing in another name. The loan documents name someone other than the person who uses the car.
A “co-signer” suggestion. The dealer proposed a better-credit family member sign instead.
Converted arrangement. A co-signer plan was switched to a primary-borrower arrangement.
“Just helping”. The named borrower was told they were only helping the real buyer qualify.
Payments from elsewhere. Payments come from a different account or person than the named borrower.
Focused exclusively on automotive law. Lemon law, dealer fraud, and automotive class actions are all we do. Our focus is evident in our results.
20 years against California dealers. Dealerships have strong legal teams, but we’ve been outmatching them for two decades, and they know it.
$400M+ recovered across 6,000+ cases. Dealers don’t write fair settlement checks without a fight, and we know how to make them.
In-house inspection capability. The Margarian Garage lets us physically inspect and document concealed damage, giving us evidence most firms simply don’t have.
No. A real co-signer is a known party to the loan, guaranteeing payment alongside the primary borrower. A straw purchase puts the entire loan in the name of someone who isn’t actually the buyer.
This is one of the most common straw purchase situations. Depending on how the dealer set things up and which statutes apply, you may have claims against the dealer. The first step is having the documents reviewed.
Do not sign anything additional without legal review. Corrective paperwork can sometimes be structured to release the dealer from liability for the original transaction.
It depends on the case. In some cases, credit restoration is part of what’s recovered. The remedies available depend on the facts and the statutes that apply.
Whether you’re the person whose name ended up on the loan or the person using the car, our attorneys are here to help. A free case review is easy, and it could change everything. Call (818) 553-1000.
Past results do not guarantee future outcomes. Every case is evaluated on its individual merits. Outcomes vary based on the dealer, the conduct involved, the documentation available, and the case posture. Attorney fee recovery in California consumer protection cases depends on the specific statute violated and the outcome of the case.
