Financing a car purchase is normally a simple process. All you have to do as a lender is to submit a credit application and once approved, the transaction is complete. The process gets complicated when the buyer has a bad credit history, lack of credit or income issues. In similar situations, shrewd dealers usually practice straw purchase dealer scam.
In the car sales industry, the term straw purchase is used to describe a situation when someone with better credit history finances or leases a vehicle for someone with poor credit history. Straw purchase of a vehicle is illegal in most of the states.
The straw purchase scam can be initiated by either the customer or the dealership. A customer attempts a straw purchase when he/she wants to buy a car for someone else who is unable to buy a car because of poor credit history. A good car dealer will terminate the deal immediately after becoming aware of straw purchase scam. Yet, if a dealer sells a car to a person buying it for someone else, he/she violates dealer agreements with banks and lending institutions.
A straw purchase car dealer scam is more often initiated by dishonest dealers as all they care about is selling a car by all means. First, a dishonest dealer will offer you to find a co-signer who will be willing to help you qualify for a car loan or purchase. However, the shrewd dealer already knows that even with a good co-signer your car loan will not be approved because of your poor credit history. Here he will probably use the next fraud mechanism. When a shrewd dealer exhausts all the means to get financing for you, he applies to straw purchase dealer fraud method, that is, he asks if anyone else can buy the vehicle for you.
How to Avoid Straw Purchase Car Dealer Scam
A straw purchase is considered fraud since loan documents have provisions that the borrower must also be the primary driver. In many states straw purchases is illegal and car dealers can get their licenses revoked if they take part in this type of activity. Here are some useful tips that will help you avoid straw purchase car dealer scam.
- Get a copy of your credit report and scores before you try to get a loan. Bring it with you to the dealership so you can know if the shrewd dealer tries to cheat you.
- Never sign different contracts for the same loan.
- If the dealer tells you that you’ve been approved, ask for the approval letter. The letter from the lender will have both names of the people responsible for the loan.
So, if you suspect any type of dealer fraud at any stage of your car purchase, the skillful and knowledgeable dealer fraud attorneys at the Margarian Law Firm are ready to provide you with solid legal assistance and aggressively fight for your rights. You are never alone against shrewd car dealers, our experienced dealer fraud attorneys will always stand by your side to protect you from various dealer frauds, including straw purchase dealer scams.
