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from the scorn-the-poor-man-as-a-thief-in-country-and-in-towne dept.
Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years with roughly 25 percent of all new auto loans made last year subprime, a volume of $145 billion in the first three months of this year. Now the NYT reports that before they can drive off the lot, many subprime borrowers must have their car outfitted with a so-called starter interrupt device, which allows lenders to remotely disable the ignition. By simply clicking a mouse or tapping a smartphone, lenders retain the ultimate control. Borrowers must stay current with their payments, or lose access to their vehicle and a leading device maker, PassTime of Littleton, Colo., says its technology has reduced late payments to roughly 7 percent from nearly 29 percent. “The devices are reshaping the dynamics of auto lending by making timely payments as vital to driving a car as gasoline.”
Mary Bolender, who lives in Las Vegas, needed to get her daughter to an emergency room, but her 2005 Chrysler van would not start. Bolender was three days behind on her monthly car payment. Her lender remotely activated a device in her car’s dashboard that prevented her car from starting. Before she could get back on the road, she had to pay more than $389, money she did not have that morning in March. “I felt absolutely helpless,” said Bolender, a single mother who stopped working to care for her daughter. Some borrowers say their cars were disabled when they were only a few days behind on their payments, leaving them stranded in dangerous neighborhoods. Others said their cars were shut down while idling at stoplights. Some described how they could not take their children to school or to doctor’s appointments. One woman in Nevada said her car was shut down while she was driving on the freeway. Attorney Robert Swearingen says there's an old common law principle that a lender can’t “breach the peace” in a repossession. That means they can’t put a person in harm’s way. To Swearingen, that would mean “turning off a car in a bad neighborhood, or for a single female at night.”
(Score: 2) by tibman on Friday September 26 2014, @03:21PM
There's no need to paint me as a bad guy. So, let's give someone two months of non-payment before turning their car off. Just like electric. I totally support this. But this article would still exist and the situations would be exactly the same. Someone will be driving on a car that is three payments behind and get disabled while idling in an intersection.
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(Score: 2) by Sir Garlon on Friday September 26 2014, @04:05PM
Nothing personal, sorry. Your tone offended my bleeding heart, I guess. :-)
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
(Score: 3, Insightful) by urza9814 on Friday September 26 2014, @04:27PM
Actually, in many states (at least RI and PA, the two I've lived in) the electric company can't always shut you off for non-payment. You can owe them $5,000, they still can't shut you off if, say, it's the middle of December. Or if you have medical equipment that requires power. No matter how much you owe them, they MUST continue providing service if cutting it off could put you in a life-threatening situation. Same goes for many other utilities -- gas company can't shut you off in the middle of winter either.
Same rule should apply to these asshats. They can't shut your car down in the middle of the freeway. No matter how much you owe. A couple hundred bucks is not worth more than a human life.
Besides, if they don't think they can pay off the loan, why the hell are they giving them the money in the first place? They're trying to establish a situation where they can loan people money they know they can't pay back, and then take full control over their life when that happens. We've already brought back debtor's prisons; what next? Nonpayment is the cost of doing business. It's a risk you take as a creditor. These guys need to start taking some responsibility for their own decisions regarding who they loan to...but why bother when the government will bail them out every time? When the government will let them use OUR tax dollars and OUR police officers to recover their losses?
(Score: 2) by tibman on Friday September 26 2014, @05:48PM
Ah, i totally get and agree with not shutting off life-support. I also agree that it should be illegal to turn anyone's car off while it is in motion (or even turned on!). But i'd like to point out that having a car disabled seems far better than having it repo'd. It also seems like the whole point of this program is to provide another incentive to pay the car bill on time. It's not supposed to screw people over, as far as i can tell. Though it appears to be doing just that.
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(Score: 3, Interesting) by urza9814 on Friday September 26 2014, @05:53PM
Yeah, I mean it is better than getting repo'd.
The way I see it though...by making the car payment higher priority as others have discussed, the loan is less risky. So the lender has a greater chance of getting it paid. So they should be able to charge a lower interest rate. So be up-front about that. Give people a 5% or whatever reduction on the interest rate if they agree to have these devices installed. That's fine.
But instead they're making these mandatory, and likely just pocketing the difference. In which case: fuck 'em.
(Score: 2) by tibman on Friday September 26 2014, @06:24PM
Agreed!
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(Score: 2) by mhajicek on Friday September 26 2014, @09:23PM
I had a car repod once because the car company neglected to take their automatic payment and also didn't bother sending a bill.
The spacelike surfaces of time foliations can have a cusp at the surface of discontinuity. - P. Hajicek
(Score: 2) by mojo chan on Saturday September 27 2014, @08:53AM
They sell the car with the expectation that it will get repossessed. That way they can throw it in an auction where it sells for next to nothing to their friends. They buy the car and sell it again for a nice profit while still chasing the person who defaulted for the remainder of their loan. Essentially they can sell the same car over and over again, while collecting a loan for something the person no longer has.
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(Score: 2, Informative) by arashi no garou on Friday September 26 2014, @04:28PM
The difference is that at least by the second month, the car buyer would have had time to make arrangements, return the car for repossession, etc. Three days? If they are a busy person, perhaps working two jobs and balancing kids and school, three days is easily overlooked. Also, disabling the car actually makes it harder to make the payment; how do you hustle up the money and get it to the lender the same day, if you can't drive?
At the very least, they should get a written reminder a couple of weeks before this type of enforcement can be used, explaining that it will be enforced after X date. That's what the utilities do; they don't just cut off your power or water, you get a notice saying when it will be cut off.