Dealers are urged to beware of ‘fronting’, a rising fraud threat where someone with a good credit rating applies for finance for a car to be used by someone refused a loan.

Paul Harrison, the FLA head of motor finance, said: “Motor finance companies are winning the fight against fraud through closer co-operation and partnerships with the police.

“Criminals always find new ways to beat the system. Fronted finance agreements are on the rise, but lenders are determined to protect innocent motorists by developing new procedures to clamp down on offenders.”

Jim Lewis, FLA motor fraud group chairman and senior fraud manager at Lloyds Banking Group Asset Finance, said: “Our real concern is when this activity creates a gateway to serious organised crime with cars used for offences such as drug and firearm trafficking.”