A former car salesman was found to have swindled more than 4 million yuan (US$480,000) worth of car loans from banks, in a case which exposes the loopholes in the current car mortgage system, reports Information Times.

In collusion with a car dealer and an insurance agent, Li forged purchase documents for expensive cars, with which he secured eight car loans from different banks, police said.

Aside from the cuts he gave to his accomplices, Li spent all the money on gambling and personal consumption.

Loopholes in the car mortgage system have caused losses of at least 300 million yuan (US$36 million) in Guangzhou since the financial service was launched in 2000, said police.

Many insurance companies have stopped selling policies that guarantee car loan repayment because of the rampant fraud.

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