What Are “Financial Cars” That Are Popular Among Anti-Social and Semi-Yakuza Groups? Why Are They So Valued Even Though, By Common Sense, the Drawbacks Outweigh the Benefits?

A bargain, but with a catch

There is a category of cars known as “finance cars.” This term refers to vehicles that have entered the market while still carrying an outstanding balance from the loan taken out to purchase them—for whatever reason—or cars that were repossessed as collateral for debt. Also known as “finance lots,” the term has come to be used in recent years to describe any car whose ownership cannot be transferred due to various circumstances.

Originally, “finance cars” were popular among organized crime members, but they’ve also gained popularity among semi-yakuza groups. In the case of organized crime groups, since the enforcement of anti-organized crime ordinances, members have been unable to purchase cars in their own names; instead, they’ve procured luxury vehicles by arranging for a third party to act as the registered owner.In April of this year, a Sumiyoshi-kai executive was arrested on suspicion of using a Toyota Alphard that had been illegally purchased by a male executive of an affiliated gang (who was arrested for fraud) while concealing his identity, despite knowing the circumstances of the purchase.

While it is understandable why organized crime groups, whose activities are restricted by laws and ordinances, use “financed cars,” what explains their popularity among semi-yakuza groups? There are circumstances specific to criminals at play here.

There are both advantages and disadvantages to buying a car with an outstanding loan. The advantages include a lower resale price compared to typical used cars and the fact that procedures for transferring ownership are unnecessary (though even if one wanted to change the registration, it would be impossible).

The disadvantages, however, are significant. The inability to transfer ownership not only limits insurance options but can also prevent the vehicle from passing its vehicle inspection, and it cannot be easily scrapped. There is a risk that the loan company might repossess the vehicle or that the owner might demand its return, making it a high-risk purchase for the average person.

However, from the perspective of organized crime groups, the fact that they can drive luxury cars at a bargain price—even without transferring the title—by paying in full with cash is also an advantage. Since it’s difficult to identify the individual and the cars are easy to acquire, this makes them a popular choice among semi-yakuza groups as well.

In fact, when we spoke with several used car dealers, they told us that the disadvantages mentioned above are now virtually nonexistent. One used car dealer explained, “The type of loan is what matters.”

“There was a time when these cars were considered ‘shady,’ but that’s no longer the case with cars financed through financial institutions today. As long as the paperwork is in order, they can pass vehicle inspections, and dealers won’t buy cars from suspicious individuals. What matters is where the loan is arranged. Whether it’s a dealer loan or a bank loan, the risk of repossession varies depending on the type of loan.

As long as the loan isn’t repaid, you don’t have ownership of the car, so there’s always a possibility it could be repossessed if the original owner defaults on the loan. If the original owner disappears, you won’t have the necessary documents, and there’s a risk the car could be repossessed.”

Even if they’re not as shady as they used to be, there’s no doubt that risks remain.

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

Mr. A, who runs an illegal loan business in Tokyo, purchased a repossessed Alphard this year for 2.3 million yen. While his reasons for the purchase included the low price and the fact that he could drive it immediately without having to transfer the title, he says there’s another reason as well.

“I was arrested for assault a long time ago, so I avoid drawing attention and run my business quietly. If I buy a car through normal channels, my purchase history gets recorded, and the tax issues are quite troublesome. Since I’m officially unemployed, I only pay the bare minimum in taxes.

If the government finds out I bought an Alphard and am even paying the automobile tax, the National Tax Agency will come after me. One reason I drive a car financed through a third party is that I have to pay the automobile tax under a third party’s name, not my own. I’m being careful because I know someone in the loan shark business who got caught because of the automobile tax.”

He says that even if he’s lucky enough to avoid having taxes collected by the National Tax Agency, anything that could lead back to him could interfere with his loan sharking work, so he avoids doing anything that might leave a trail. Since he has a criminal record, once his background is checked, the police will be on high alert. He says he can’t let his guard down, even when it comes to something as simple as a car.

Mr. B, a former recruiter, also mentioned that one of the benefits was that “you can buy a car on a whim and just abandon it” —since there’s no registration process, they’re easy to dispose of.

“When I was working as a scout, a car was essential for getting around. However, since it was an illegal business, if the police took notice, they could track me down through the license plate. That’s why I had to switch cars frequently. It wasn’t about keeping up appearances or wanting to customize it—it was strictly for work—so I found them invaluable because they were cheap and ready to drive right away.”

When asked what happened to the previous car after switching, he mentioned that “there are dealers who specialize in cars with a history, ” but when pressed for details, he dodged the question.

For some people, “financial cars” are a way to get a car cheaply, and it’s not an illegal activity. However, the risks are significant for the average person. Since there are many cars on the market that have been used in crimes, it’s probably safest to steer clear of them.