When you need a car, your main concern may be saving money or qualifying for an auto loan, especially if your credit is less than ideal. One appealing way to get a car with bad credit is using someone else’s name or a “car straw” purchase deal. However, don’t go down this route unless you’re ready to face some legal trouble. Here, we’ll explain car straw purchase deals, why they are illegal, and several preferable alternatives to help you secure your next ride.
What is a Car Straw Purchase Deal?
If you know your credit needs work, you might be nervous about qualifying for financing. It could be tempting to ask a friend with good credit to apply for a loan and purchase the car for you. But be warned: it’s illegal! This practice is known as a car straw purchase deal.
A straw purchase usually happens when a car buyer can’t qualify for financing on their own or doesn’t have enough money for a down payment. In these cases, buyers may ask a friend or family member to buy the car for them, resulting in a straw purchase. If someone in need of a car uses another person’s information to get an auto loan, then they are also making a car straw purchase deal.
Why are Car Straw Purchase Deals Illegal?
Now a straw purchase may seem like a typical transaction where someone is assisting a friend or relative with an auto purchase, but why would it be illegal?
When you purchase a car, especially with a loan, there are lots of documents to sign. Loan documents have provisions indicating that the buyer of the vehicle also has to be the primary driver of that vehicle. This clause helps protect lenders; in the event of a repossession, or even with insurance in case of an accident, it is easier to find the vehicle and its owner and ensure the appropriate coverage is in place on the vehicle.
Loan documents are meant to establish an agreement between the lender and the borrower. When the borrower and the primary driver of the vehicle are not the same person, then the contract has been breached, and any dealings that do not align with the terms of the contract are fraudulent.
You may plan to ask someone else to purchase a car for you with the promise that you will give them the money for the payments. While this strategy may seem ethically sound, it’s still illegal. In this circumstance, the car’s primary driver (that’s you) still does not have any legal ties to the auto lender, since they (you) did not sign the official loan documents.
Orchestrating a car straw purchase deal is considered fraud and can get you in some serious legal trouble. Depending on where you live, you and the buyer of the car could face fines, repossession, or revoked driver licenses.
It’s worth quickly noting that straw purchases aren’t just tied to cars. They can also happen when purchasing firearms, real estate, and more.
Alternative Options to Car Straw Purchase Deals
So, you’re having trouble finding financing, but you can’t ask a friend to buy a car on your behalf. What other options do you have?
The most reliable option is to work with a subprime auto lender in San Diego. These lenders specialize in helping those with poor credit get financing, so you don’t have to worry about your credit score disqualifying you. You can go further to improve your chances of approval by adding a cosigner. A cosigner should have good credit and should be willing and able to take over your car payments if you can’t make them.
If you’re not in a rush to buy a car, you may want to work on improving your credit score. Focus on making your monthly payments on time and catching up on any past-due accounts. If you’re making multiple credit card payments, you may consider consolidating them into one more manageable monthly payment.
Work with FA Financing
Even if you’re desperate for a new vehicle, don’t risk the legal trouble of a car straw purchase deal. There are plenty of other options to get you approved for a car – and FA Financing can help you get the funds you need for your new ride.
FA Financing specializes in bad credit car loans in San Diego, helping people secure financing regardless of their financial past. Many of our clients have taken on multiple auto loans, had a vehicle repossessed, or have had a recent bankruptcy. No matter what has happened in your financial life, FA Financing can work with you to make your loan application as appealing as possible to our wide range of lenders.
Contact FA Financing today to learn more about our services.
