Fronting

Meaning and Definition

Fronting refers to a practice where one individual, typically with a better credit history or financial standing, agrees to act as the main borrower or applicant on a car finance agreement on behalf of another person. The person who benefits from the finance agreement is the actual user or driver of the vehicle, but they may not qualify for the loan or have a poor credit history, so they use another person's name to secure the financing.

Why it is important to know

Understanding fronting is important as it highlights potential legal and ethical issues associated with misrepresentation and fraudulent activities. Fronting is considered fraudulent because it misrepresents the true borrower and financial risk to the lender. It is illegal and can lead to serious consequences, including legal action and financial penalties.

Example in car finance

Suppose a person with a poor credit history wants to obtain car finance but does not qualify for a loan on their own. They convince a friend or family member with a better credit profile to apply for the car finance agreement on their behalf. The person with the better credit history becomes the main borrower, while the actual user of the vehicle is the person with the poor credit. This practice of fronting is illegal and can lead to severe consequences for all parties involved if discovered. It is important to be transparent and honest in car finance applications to avoid legal and financial complications.