Car Loan/Lease Fraud Making a Bad Situation Worse

Robert Farago
by Robert Farago
car loan lease fraud making a bad situation worse

What starts out as the [now] usual report on the huge number of high-risk sub-prime car loans– "According to Power Information Network, 1.85 of the 9.6 million customers in 2006 who leased or financed a new car were subprime borrowers or consumers with weak credit"– suddenly swerves towards Uh-Oh Town. The report highlights BMW Financial lease holder Vivian Snyder. A salesman inflated Snyder's income ($2500) on her credit application by 150 percent. The reporter then secured the loan application and discovered that "Snyder's income had been changed once again – from $6,000 to $8,600, this time without her knowing. An "8" had been placed before the "6" and "0"s tacked at the end." When confronted, Freemont, CA AutoNation General Manager Larry Long claimed the change had been made in Snyder's presence, and then blamed BMW Financial for approving the lease. "We have investigated this matter internally," Bimmer spokesmouth Martha McKinley insisted. "And we are satisfied that BMW Financial Services acted appropriately at all times during the application and credit review process." Yes, well, AutoNation eventually ate the lease and "according to consumer advocate Rosemary Shahan with Consumers for Auto Reliability and Safety the practice is common. 'This is an epidemic of loan applications being falsified. In fact, the model for the meltdown we're seeing in real estate and home mortgage lending was auto lending.'" [thanks to buzzlightyear for the tip]

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4 of 24 comments
  • Landcrusher Landcrusher on Feb 25, 2008

    BTW, TDoyle, I have never inflated my income to borrow money. Which is likely why I have never had a problem paying back loans.

  • Bjcpdx Bjcpdx on Feb 25, 2008

    If you can't afford to pay cash for a car, you can't afford it. There, I said it. Buy something used with green. I realize that if everybody operated this way, the automobile industry would cease to exist. But the fact remains that paying interest on a depreciating liability (a car is not an "asset" or an "investment") is not good business sense. So if you must finance, start at that point and take the shortest term you can with as large a down payment as you can. Don't even get me started on leasing. Another reason for not padding your income is because it's um... ILLEGAL?

  • on Feb 25, 2008
    The agents involved were all likely on quota, and got paid the more they lied with little or no consequences. Sounds suspiciously like Fannie Mae.
  • on Feb 25, 2008
    If you can’t afford to pay cash for a car, you can’t afford it. That's how I've tried to live my life; though I did see a good deal on a used 240sx several years ago when I was looking for a car and did borrow $4,000 to buy it. I also paid back the $4,000 in less than a year (~$600 per month). So if you must finance, start at that point and take the shortest term you can with as large a down payment as you can. That's how my wife and I bought our house. 15 year mortgage that we are on a pace to have paid off in ~seven years.