Auto Loan Fraud Rises 16% to $9.2B, Driven by Misrepresentations

Auto loan fraud has surged to a record $9.2 billion, marking a 16% increase from the previous year, according to a report by Point Predictive. The study highlights that fraud now constitutes about 1.3% of all auto lending, significantly outpacing overall growth in the sector. Major sources of fraud include income misrepresentation, which accounts for 42% of total fraud, and increasingly common tactics like credit washing and synthetic identity fraud, collectively representing over a quarter of fraudulent activities. Delinquencies in the subprime auto loan market have also reached record highs, prompting lenders to offer payment extensions to help struggling borrowers, although this could exacerbate their financial burden. Experts warn that the current economic pressures could lead to higher rates of fraud, as borrowers turn to deceptive practices to secure financing. States such as Georgia and Texas are identified as the riskiest for auto lending fraud, while Vermont and Maine are the least affected.