MANILA, Philippines—The central bank has warned the public against fraudulent schemes by involving motor vehicles sales, with various modus operandi victimizing both buyers and sellers, and banks that are scammed into granting auto loans to fictitious borrowers.
In a statement on Wednesday (Sept 29), the Bangko Sentral ng Pilipinas (BSP) cautioned the public against an increasingly prevalent racket employed by car theft syndicates.
Perpetrators of the so-called “assume balance” or “pasalo” scheme — also known as“pasalo-benta” — target buyers who are hoping to save money on their vehicle purchases and sellers who need to transfer their loan liabilities to the buyer.
Under this scheme, a syndicate member would buy a vehicle from a seller with an agreement to assume payments for the auto loan. However, the syndicate member has no intention of paying the remaining amortizations and will sell or dispose of the vehicle to an end-buyer for a profit using falsified documents. Because the end-buyer is holding fake documents, he has no rights over the vehicle.
“As a result, the original seller defaults on his auto loan and the car gets repossessed by the financial institution, leaving the end-buyer with nothing,” the central bank explained.
The regulator noted that, in these cases, banks still hold the vehicles’ original certificates of registration from the Land Transportation Office and car dealers, and may still recover them.
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