Car Dealers Committing Loan Fraud To Increase Sales
An increasing number of American consumers are taking out larger loans to cover the rising cost of auto prices. However, in order for auto loans to be approved, some car dealers are lying about the incomes of customers and providing inflated numbers.
Some say that this practice is due to the fact that borrowers are not being realistic about what type of car they can afford. However, car dealers are not telling customers that they are lying about the borrowers’ incomes.
Some laws require that a car dealer buyback a loan if a customer can prove that the car dealer committed loan fraud without their knowledge.
“The consequence for a lot of people is to ruin them financially for five to 10 years,” said Richard Feferman, a New Mexico lawyer who has sued car dealers for committing loan fraud.
Typically, a car dealer should ask for pay stubs to prove the income of a customer. However, there have been a rise in the number of subprime lenders that are not checking the accuracy of reported incomes before approving a loan. Income verification only occurred for 7% of auto loans since 2017.