In this episode, we cover:
- Two types of auto dealership fraud:
- When dealerships are defrauded by others
- When dealerships defraud the marketplace
- Real-world example featuring Auto Masters dealership in Tennessee (alleged case)
- How Buy Here, Pay Here financing works at small used car dealerships
- Customers make payments directly to the dealership, not a bank
- Often structured as weekly payments rather than monthly
- How small dealers finance customer loans using a line of credit from backup lenders
- Loans are packaged and used as collateral
- Dealers must prove loans are real and performing
- Allegations in this case:
- Dealer obtained $30 million from a backup lender using non-performing or fabricated loans
- Resulting risk of title problems for customers who never receive proper ownership
- How this affects consumers:
- Dealerships may fail to secure or transfer vehicle titles
- Customers might unknowingly drive cars with unclear or missing ownership documentation
- Behind-the-scenes financial structure of used car dealers
- Often invisible to the public, but can lead to serious consequences
- Brief preview of the next episode:
- How dealerships can protect themselves from fraudulent buyers using fake IDs
