The Informed team was thrilled to be featured in the recent Forbes article, “Fake Paystubs, Overstating Income, Bank Pullouts Plague Auto Financing” by Ed Garsten. Ed interviewed executives from Informed.IQ and Tenet.com for their views on how these issues are impacting indirect auto lenders.
The story started: Auto shoppers looking to finance their next vehicles have fewer choices of lenders since a slew of banks pulled out of the indirect market—making car loans through dealerships other third parties. That, plus sky high sticker prices, has created some desperation for some consumers who can’t swing a vehicle purchase. At least not without financing the cost.
Some are so desperate to qualify for loans they submit fake pay stubs or otherwise overstate their incomes. That’s according to research by Informed.IQ, an artificial intelligence, machine learning-based company that verifies loan applications for lenders.
Original Informed Research
Garsten shared two lists based on recent Informed research. One ranked states in order of loan application percentage with fake pay stubs. The other ranked states by the incidence of applicants overstating their incomes by more than 10%.
The story goes on to quote Informed’s Jessica Gonzalez. “Banks exiting indirect lending is one trigger for applicants’ fraud, according to Jessica Gonzalez, director of lending strategies at Informed.IQ. “We see fraud rates increase whenever the market tightens. It’s expected,” said Gonzalez.
Where an applicant lives is also a fraud indicator.
Gonzalez said there’s also a strong correlation of fraudulent submissions among self-employed applicants. This is because most lenders require immediate proof of income and much more documentation for self employed applicants.
Ironically, those with lower credit scores, in the so-called subprime group, are least likely to misrepresent their incomes because lenders require more robust documentation, Gonzalez said.
You can read the full article here in Forbes.
Adine Deford is the VP of Marketing at Informed.IQ. She has more than 25 years of technology marketing experience serving industry leaders, world class marketing agencies and technology start-ups.