Changing Your Car – Beware Of The Dangers | The Best Car Finance Blog In The World

Changing Your Car – Beware Of The Dangers

Friday, 27. February 2009

As times become more difficult people turn to desperate measures. Fraud is therefore on the increase. I am hearing each week about many more scams being uncovered. Small used car dealers can no longer get what is known as stocking finance. In the past the dealer would buy say £500,000 worth of cars and a lender would provide the money, charging an interest of say half a percent per month secured against the stock. This rolling facility would enable them to buy and sell cars whilst retaining a reasonable selection of cars but as used car prices have continued to drop increasing the risk and with less money available to lend many dealers have run into difficulties obtaining stocking finance. So what some have been doing is putting individual cars on finance in their own name then selling them to a private buyer but continuing to pay the finance. This is fine until the buyer wants to put the car on finance himself or the dealer goes bust. If you are a private buyer and bought the car from a dealer you could well be considered to be an ‘innocent buyer’ and be legally allowed to keep the car but you can guarantee that the lender will try to recover it causing you a lot of problems. If you have bought the car as a business you may easily find that you cannot keep the car and end up losing it. My advice here is to get an HPI report and check that the car isn’t on finance before parting with cash. In addition to this type of fraud we have lease brokers, many of whom were under capitalised when they started their businesses, who are now on their last legs and using every means possible to keep afloat, which for some includes some very shady activities. I was just about to explain a few of these when I had a call from my accountant and in general conversation I mentioned the content of my newsletter this week. Without mincing his words he pointed out that I’m bonkers. He said ‘There is only one way that all of these people that you write to (now around 13,000 per week) can ensure that they are not going to be subject to fraud and that’s to use you – you silly bugger! Why are you giving away all this information so that they can go off to the competition?’ Well, I guess he has a bit of a point so if you want the information you can buy my book or better still make sure that you use me for your finance. Having said that, I like to think that I’m a bit more generous than my accountant, so one piece of advice is don’t simply go for the cheapest, on the basis that if the deal looks too good to be true it probably is. Of course the wise crooks won’t make their rates a lot cheaper they will make them just a little cheaper to make them look credible but beware if they ask for initial rental cheques be made payable to the broker, you may find that he has gone bust before delivery is due and you have not only lost the car but also your initial rental. By Graham Hill