Don't lie to get motor finance

  • Fraudulent finance totals £15.8 million over 12 months
  • 10,000 car buyers lied to try to get motor finance
  • Buyers warned they will face prosecution

Car buyers are being warned not to put false information on applications for motor finance because they could be charged with fraud. 

Latest figures from the Finance and Leasing Assocation show that there were almost 2,500 fraudulent motor applications in the first three months of 2010. The FLA statistics also reveal that in the 12 months to March, there were almost 10,000 attempted fraudulent applications to motor finance providers, with a total value of £126.8 million. The background checks by finance companies kept the number of actual cases of fraud down to 960, worth a total £15.8 million.  

Most fraudulent information in a finance application usually concerns the car buyer's earnings or income. Buyers with limited funds put incorrect information about their salary and, in the downturn, traders are more willing to turn a blind eye.

An FLA spokesman said: 'Obviously, we do not regard the car buyers who make false claims about their income as criminals, but we don't want people to over-commit themselves and come to a point where the car get repossessed.  

'There are occasions, such as redundancy, when people simply cannot afford their repayments, but hopefully they can contact the finance provider to try to come to an agreement. It is in the best interests for everyone to avoid this situation.' 

There has been a slight decline (3%) in fraud in the first three months of this year compared with the same period 12 months ago, however, a large number could be committed unwittingly by car buyers. Almost a third of motor finance fraud (30.8%) in the past year was application fraud where a customer - sometimes unintentionally - gives incomplete or inaccurate information to a lender.  

More worryingly, 29% of cases were as a result of 'conversion fraud' where the ownership of the car does not pass to the customer until the end of the finance agreement, so customers are committing fraud if they sell their car with outstanding finance.  

First party fraud accounted for 27.7% of fraud cases over the past year. This is where a customer makes their loan repayments using, for example, a false credit card. The 'customer' may also be illegally leasing the vehicle to another person, through a bogus car rental business, for example.  

Paul Harrison, Head of Motor Finance at the FLA, said: 'People have legal responsibilities when taking out motor finance. If they fail to disclose their credit history during the application process or try to sell a vehicle that is still on finance, they are committing fraud against their lender and may have their car taken from them.'

For more advice on finance go here and for the latest loans and a personal credit history check go here.