Why Finance Cars Attract Criminal Networks Despite Their Major Risks and Limitations

Cheap, but with a catch

There are vehicles known as financial cars. The term refers to cars that end up on the market while still having an outstanding loan balance from when they were purchased, or cars that have been seized as collateral for debts. They are also called financial goods, and in recent years the term has come to broadly refer to vehicles that cannot have their ownership registration transferred for various reasons.

Originally, financial cars were popular among people connected to organized crime, but they have also become popular among semi-organized criminal groups.

For organized crime groups, after anti-organized crime ordinances were introduced, members could no longer purchase vehicles under their own names. As a result, they obtained luxury cars by arranging for other people to be listed as owners or through other methods.

In April this year, an executive member of the Sumiyoshi-kai was arrested on suspicion of using a Toyota Alphard that he knew had been fraudulently purchased by a subordinate gang member (who had been arrested on fraud charges) while concealing his identity.

It is understandable why organized crime groups, whose activities are restricted by laws and regulations, would use financial cars. But why are they also popular among semi-organized criminal groups?

The reason lies in circumstances unique to criminals.

Buying a vehicle with an outstanding loan has both advantages and disadvantages.

The advantages include the fact that the purchase price is much lower than that of ordinary used cars, and that procedures such as transferring ownership rights are unnecessary when the rights are transferred (although the ownership cannot actually be changed even if one wants to do so).

The disadvantages, however, are significant.

The inability to change ownership means not only that the available insurance options are limited, but also that the vehicle may not be eligible for inspection. It may also be difficult to simply scrap the car. There is always the possibility that the finance company could repossess the vehicle or that the registered owner could demand its return, making it extremely risky for ordinary people to purchase.

However, even without changing ownership registration, paying in full with cash allows someone to drive an expensive luxury vehicle at a low price. For organized crime groups, this can be an advantage. If a person’s identity is harder to trace and the vehicle is easy to obtain, it becomes one reason why semi-organized criminal groups are also attracted to them.

When several used-car dealers were interviewed, they said that many of the disadvantages mentioned above are now rarely an issue.

One used-car dealer explained:

“The type of loan is what matters most.

There was a time when these cars were considered suspicious, but today’s financial cars are not necessarily like that. If the paperwork is complete, they can pass vehicle inspections, and dealers do not buy cars from suspicious individuals.

What is important is where the loan was taken out. Whether it is a dealer loan or a bank loan makes a difference. The risk of repossession varies depending on the type of financing.

Until the loan is fully repaid, ownership of the vehicle technically does not belong to the buyer, so there is always a possibility that the car will be recovered if the original owner stops making payments.

If the original owner disappears, the necessary documents may not be completed, and the vehicle could potentially be seized.”

Even though financial cars may not be as suspicious as they once were, there is no doubt that they still carry risks.

“I don’t want to pay automobile tax under my own name”

A man identified as A, who claims to run an illegal lending business in Tokyo, purchased a Toyota Alphard as a financial car for 2.3 million yen this year. He said the main reasons for buying it were that it was cheap, could be driven immediately, and did not require a change of ownership registration. However, he also had another reason.

“I was arrested in the past for assault, so I try to avoid standing out and keep my business low-profile. If I buy a car through normal channels, there’s a record of the purchase process, and tax issues become a major headache. On paper, I’m unemployed, so I’m only paying the minimum amount of taxes.”

“If the government finds out that I own an Alphard and am also paying automobile tax, the tax authorities will come after me. One reason I drive a financial car is that the automobile tax has to be paid under a third party’s name rather than my own. I know someone in the illegal lending business who was caught because of automobile tax, so I’m careful.”

Even if he manages to avoid having the tax authorities collect additional taxes from him, he says he avoids anything that could expose his identity because it could interfere with his illegal lending business. Since he has a criminal record, if authorities check his background once, he believes the police will keep a closer eye on him. Even something as simple as owning a car requires caution.

Meanwhile, a man identified as B, who previously worked as a scout, said the advantage was that the cars could be bought casually and abandoned when no longer needed. He explained that not having to go through normal purchasing procedures made them easy to dispose of.

“When I worked as a scout, having a car was essential for transportation. However, because the business itself was illegal, if the police started watching us, they could identify us through the vehicle’s license plate. So we needed to change cars frequently.”

“It wasn’t about showing off or modifying cars. The car was purely for work purposes, so the fact that I could get one cheaply and immediately was extremely useful.”

When asked what happened to the previous cars after they switched vehicles, he replied that there are dealers who specialize in handling cars with complicated backgrounds. However, when pressed for more details, he avoided answering.

Financial cars are not necessarily illegal, and, for some people, they may appear to be a way to obtain a vehicle cheaply. However, the risks are significant for ordinary buyers. Many vehicles on the market may have been involved in crimes or other problematic situations, so avoiding such purchases is generally the safest choice.