Criminal lawyer Amolat Singh said the police could investigate such education loan schemes as they would amount to cheating.
For those who take up the car loan and then part with the car, they can land themselves in serious trouble if the car is misused.
There were the other "obligations and burdens" that came with being a vehicle owner, Mr Singh said.
"If the road tax or insurance is not paid, the liability is on the owner," he said, adding that owners could be charged in court for such offences.
Ms Tan Huey Min, assistant director of non-profit debtor advisory group Credit Counselling Singapore, described such schemes as "unethical".
"Let's put it this way," she said. "We know it's too good to be true. Anything that looks so easy, so attractive, there is always a catch."
On car rental firms involved in such deals, Alpine Car Rental's general manager Jeffrey Ee said: "A reputable car rental company won't do this sort of thing."
The reason? Insurance.
How the car loan scheme is supposed to work
Get a loan from bank.
Get the car back five years later, and you take over to repay the loan. Buy a car. If you have no driving licence, get someone with one for the auto insurance. Lease the car to a car rental company on a five-year contract. It will then service the loan. Broker pays you $5,000 for a $60,000 car.
"If there is an accident, the insurance company will definitely repudiate responsibility," Mr Ee said, adding that he knew of workshops and used-car dealers who resorted to such schemes.
He has also received offers from people who wanted to rent their cars to him. He said he has rebuffed them all.
"It's more or less due to the economy," he said. "They buy their car at expensive prices, and find out they cannot service the loan."
Mr Winson Toh, head of fraud risk management at OCBC Bank, said the bank has a set of credit evaluation processes to assess an applicant's credit worthiness, and verify a loan application's supporting documents.
He added: "Nevertheless, we would like to advise the public to only approach the banks or their authorised agents for loan applications and to be wary of requests to disclose personal particulars to third parties.
"This includes documents such as photocopies of NRIC, Central Provident Fund statements and income statements."
