Committing bank fraud is not something many consumers think about when they head out to a dealership to buy a new car.
In fact, with this scam you may not even know that you're potentially defrauding the lender, but you'll want to be careful because your signature is all over that auto credit finance application.
In the car business it's referred to as auto credit "finance application beautification." What it entails is changing a customers real information in order to obtain a lenders approval.
They may change information like:
and any thing else that is required to get a banks approval for your new loan.
Here's How They Do It
The most common way I've seen this done is by customers signing a blank auto credit finance application.
It starts, as a normal deal would, with a salesman getting a complete credit application, with all of your correct information on it and is then signed by you.
When your credit application gets back to the finance manager, they may see information that does not meet the banks minimum requirements and they'll want to make some changes to get the approval.
The most common thing to change is your monthly income. In other words, they will give you a pay raise...
If you make $1,500 a month, but the lender requires a minimum of $2,000 a month to approve your loan...Guess what?...You now make $2,000 a month.
To bad it's not
that easy with your boss.
They'll usually try to get you to sign a blank (at least the income section is blank) credit application and tell you that they spilled coffee on the old one, or something to that affect.
Sometimes they will out right tell you what they are doing so that they can coach you on what to say if the lender were to call you.
All that being said, it's your signature on the credit application and your signature is saying to the bank that all the information supplied on the application is accurate and correct.
If the bank were to review your file sometime in the future and find that your income was incorrect they are going to call the dealer to ask some questions.
What is the dealer going to tell them? "That's what the customer told us they made." You are now stuck in the middle of a bank fraud investigation.
Not a fun place to be!
With Your Information
Application beautification is a really easy way for a dealership to commit bank fraud, but there are many other more complex methods that I've seen used.
These go so far as to:
Cutting and Pasting Driver License Information
If a customer had an invalid or even no drivers license, they'd make one for you using another customers drivers license information.
Manufacture Pay Stubs
This one goes hand in hand with the pay raise mentioned above. If the bank requires proof of income, they'll supply it. Again, if they are called on it, they are going to turn it back to you and tell the bank that you gave them this fake pay stub.
Making People Legal Residents
Manufacturing social security cards and altering green cards, etc.
The list could go on and on. Just about any way, shape or form you can think of to commit bank fraud it has probably been done at one or more dealerships across the country.
It's very easy to protect yourself, but very seldom done. Simply ask for a copy of the credit application you've signed.
In the close to 12 years I've been in this business I can't remember a time when a customer has ever asked for a copy of the credit application.
You want this copy, because it is your get out of jail free card if the bank ever comes knocking.
If the dealer manufactures information about you to get the approval and you have a copy of your signed credit application with the correct information, then the lender will know that the dealer is to blame and you won't have to worry about doing 3 to 5 for bank fraud.