FLA warns car buyers over finance fraud

Car buyers have been warned to take care when applying for finance as they run the risk of committing finance fraud.

The Finance and Leasing Association (FLA) has warned both car buyers and sellers that many people can commit a serious crime unintentionally when it comes to vehicle finance. They say that many provide false information in applying for finance or when selling a car with outstanding finance without even knowing it.

New figures from the FLA show that around 2,500 fraudulent motor finance applications were made in the opening quarter of 2010. In comparison with the same period a year ago, in quarter one of 2009, this represents a slight decline of around 3% - but the FLA warns that a large proportion of this fraud is committed unwillingly by new and used car buyers.

Over the past year, the FLA says that has been a total of 10,000 attempts at fraud reported by motor finance providers. Altogether this amounts to around £126.8 million worth of fraud.

Around a third (30.8%) of all fraud in motor finance over the past year is believed to have been where a customer has given a lender incomplete or inaccurate information. Known as "application fraud", the FLA says that many times this is committed unintentionally - but warns that an unintentional crime is still considered a crime.

"If people fail to disclose their credit history during the application process or try to sell a vehicle that is still on finance, they are committing fraud against their lender and may have their car taken from them," said Paul Harrison, the FLA's head of motor finance.

Lynn Sykes, North Yorkshire, Vauxhall Corsa Life

Lorraine Louw, London, VW Polo