FSS Warns "Beware of Fraud When Using Used Car Loans"

[Asia Economy Reporter Song Hwajeong] #A borrowed 70 million KRW to purchase a used car, believing in a side agreement that the vehicle would be operated as a rental/lease car by B Corporation, which would repay the loan on their behalf and provide profit payments. However, B Corporation embezzled the loan, transferred the title of a defective vehicle (worth about 35 million KRW) to A, then went out of business and disappeared.

#C provided personal information necessary for purchasing a used car, such as a driver's license and account details, to a used car dealer and requested the dealer to handle the sales and loan contracts. The used car dealer fraudulently used C's name to contract a low-priced vehicle (18 million KRW) at a high price (60 million KRW) and executed the loan.

According to the Financial Supervisory Service on the 7th, complaints have been raised by fraud victims who trusted scammers' promises that if they purchased used cars with loans and rented them out, the principal and interest would be paid on their behalf and rental income would be provided, but the scammers disappeared causing damages.

When scammers embezzle the purchased vehicle or loan funds and disappear, victims claim the loan is invalid or should be canceled, but it is rare to find procedural defects in the financial company's loan process, making practical relief difficult.

Therefore, the Financial Supervisory Service urges caution with five key points when using used car loans: ▲always refuse if requested to enter into a side agreement during the transaction ▲directly handle the vehicle sales contract and loan application ▲do not pay the purchase price before receiving the vehicle but pay upon vehicle delivery ▲check the actual vehicle and accident history before deciding to purchase ▲if fraud signs are discovered after the loan, returning the loan amount can allow loan withdrawal.

In particular, if requested to enter into a side agreement during the transaction, it must be refused. In used car transactions involving financial company loans, the contracts consumers enter into mainly include the used car sales contract for vehicle purchase and the loan contract with the financial company for purchase funds. When buying a used car with a loan, if you are encouraged to enter into side agreements related to loan repayment or profit payments beyond the sales and loan contracts, it is highly likely to be fraud, so caution is necessary.

To prevent fraud such as paying the vehicle purchase price but not receiving the vehicle, payment should be made simultaneously with vehicle delivery.

There have been damages caused by delegating contract signing to third parties (used car dealers, etc.) resulting in unwanted contracts. Especially if non-face-to-face agreements (electronic agreements) are signed after identity verification using an ID card or joint certificate, it is difficult to prove the contract was unintended, so it is safer to sign contracts personally.

There are cases where victims trusted scammers' promises of profit payments, took out loans without inspecting the actual vehicle, and later received only defective vehicles whose value was lower than the loan amount. When purchasing a used car, you should verify whether the purchase price is appropriate and check the vehicle's condition by reviewing market price information by model and vehicle accident history before making a decision.

If the consumer has not yet paid the vehicle purchase price to the transferor (used car sales company, etc.), the loan amount credited to the consumer's account can be returned to the financial company to withdraw the loan contract. Even if fraud signs are recognized after the loan, exercising the right to withdraw the loan application and canceling the sales contract can minimize damages. However, the right to withdraw the application can only be exercised within 14 days from the loan execution date.

This content was produced with the assistance of AI translation services.