What are my rights if I’ve been accused of making a straw purchase on an auto loan?

I purchased a vehicle 1 week ago. I obtained loan approval, signed papers and left the dealership. 2 days ago, I received a “welcome call” from the loan company. They asked if I was the primary driver on the vehicle. I informed them, that my fiance (who I have lived with for 2 years and will be marrying in 6 weeks) will also be driving the car because I purchased it as a family vehicle. The loan company has returned the loan to the dealership and has called this a “straw purchase” refusing now to honor the loan. Do I have any rights here?

Asked on March 16, 2012 under General Practice, Pennsylvania


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

The straw purchase is a serious and illegal concept. The loan company is incorrect in this situation because the lender should not care who is going to be primary or secondary driver of the vehicle as long as a) the person who financed it is also driving the car and b) the insurance is in both of your names and c) the person who is the secondary has a driver's license. There is no security issue here. You need to file a complaint with your department of financial institutions or the entity who handles motor vehicle loan companies.

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