Fronting is the term used to describe a fraudulent act where someone takes out finance on behalf of another person.
In cases of fronting, the person whose name is on the finance document is not the person who is keeping and driving the financed vehicle. This is a criminal offence and can lead to prosecution or large fines.
There are several different types of fronting, some of which are outlined below:
Example One: Person A’s name is on the finance documents and the V5, but Person B is keeping the car and making the payments on the finance agreement by sending a Direct Debit to Person A every month to cover the payments.
This is illegal because Person B has not been authorised for the finance agreement and may be of high risk to lenders. If they fail to make the payments they may not only damage Person A’s credit report and put them at a risk, but in the worst-case scenario the finance may not be paid. If the finance is not paid, the lender would seek to repossess the vehicle as they still own it until the finance is settled. If Person B is keeping the car, it could be difficult for the lender to locate them and repossess the vehicle as they only have the details of Person A.
Example Two: Person A takes out finance on the car but chooses to sell it, but doesn't settle the finance before doing so. Person B buys the car and is not aware of the outstanding finance as they have not done a car history check. Person A fails to settle the finance and then misses payments, but the lender has difficulty repossessing the car (against which the loan is secured) as it is now with a different person. As the vehicle legally belongs to the finance company until all finance is settled, they can repossess the car from the new owner without paying them any compensation.
Example Three: Person A takes out car finance, then changes the name on the V5 document to Person B. Person A is paying the finance, but Person B keeps and drives the car.
This is one of the most common forms of fronting, and often happens either with parents who buy a car for their child or with couples where one partner earns more than the other so can afford a more expensive finance agreement. In these situations, the correct thing to do is to take out an application with a guarantor or a joint application.
In any situation where you suspect that you may be unintentionally Fronting, or be a victim of Fronting, it's best to contact the finance company who provided finance for the car to clarify and help to rectify the situation. To avoid Fronting be sure to follow the advice below: