Everybody has certain dreams at the back of their mind that they want to fulfill desperately. It might be buying their own house, being financially independent or even purchasing their dream car. However, when we are faced with a roadblock, we tend to find a way around the obstacle. A car straw purchase is the solution that buyers or dealers tend to pick when they are stuck without an auto loan approval.
Usually, straw purchases are commonly used for firearm sales. But in the case of automobiles, a straw purchase refers to a buyer or dealer intentionally financing a vehicle for someone who is not eligible to get an auto loan. The user of the car is then obliged to make payments for the loan even though the car is not in his name. If someone else is applying for the loan on your behalf, your name may not be there in the car title even though you are making regular payments. Therefore, understanding the car straw purchase in detail will not only help you stay away from it but also help you to prevent it before it happens.
Understand the Car Straw Purchases in Detail
1) Ask: Who Initiated the Fraud?
There are two sides to the coin of an auto straw purchase. Either the fraud could be initiated by the buyer or by the dealer. In the case that the car is purchased for someone else and the individual applying for the auto loan is the initiator, then the lender has the authority to cancel the agreement. Alternatively, a dealer may initiate the fraud by assuring the car buyer that the auto loan will be approved and he can make payments directly to the lender. During such times of vagueness, the car buyer should actively follow up on title registration and ownership rights. Thus, in order to stop any fraud, it is important to identify the car straw purchase fraud and be aware of its consequences.
2) Consciously Sign the Contract
Getting duped into a car straw purchase is a difficult case to explain in front of the court. The best way to avoid the situation of a car straw purchase is to get a co-signer and consciously fill out the auto loan form. Make sure that you check everything in the loan approval letter. If it only contains the lender’s name and details, it is a red flag and you should look into it immediately. Many dealers might get your sign and your co-signer’s signature on different forms so that they get an opportunity to do a straw purchase. The signatures of the co-signer and the car owner should be on the same contract to avoid any future discrepancies.
Work on Yourself: Improve your Credit Score
Everybody has few financial setbacks but you can overcome them only through consistent self-improvement. The question that should burn in your heart before you make a straw purchase should be: “Why can’t I be enough to finance my own car?”. Work towards improving your credit score by paying past bills and loans. Once you have the right foundation and the correct financial strength, you will become eligible to apply for an auto loan without having to fear the consequences of a car straw purchase.
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