USA: Pay Car Loans on Time or your car won't start .....

[Camrysfa]

In USA, the car loan company is able to disable the car if the car instalment is not paid on time.

Coming here soon? I think not likely . . .

 

 

 

http://seattletimes.com/html/localnews/2024625051_carpaymentsxml.html

 

 

The thermometer showed a 103.5-degree fever, and her 10-year-old’s asthma was flaring up. Mary Bolender, who lives in Las Vegas, needed to get her daughter to an emergency room, but her 2005 Chrysler van would not start.

The cause was not a mechanical problem — it was her lender.

 

 

Bolender was three days behind on her monthly car payment. Her lender, C.A.G. Acceptance of Mesa, Arizona, 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. It was not the only time this happened: Her car was shut down that March, once in April and again in June.

 

 

This new technology is bringing auto loans — and Wall Street’s version of Big Brother — into the lives of people with credit scores battered by the financial downturn.

 

 

Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years. The jump has been driven in large part by the demand among investors for securities backed by the loans, which offer high returns at a time of low interest rates. Roughly 25 percent of all new auto loans made last year were subprime, and the volume of subprime auto loans reached more than $145 billion in the first three months of this year.

But before they can drive off the lot, many subprime borrowers like Bolender must have their car outfitted with a so-called starter interrupt device, which allows lenders to remotely disable the ignition. Using the GPS technology on the devices, the lenders can also track the cars’ location and movements.

 

 

The devices, which have been installed in about 2 million vehicles, are helping feed the subprime boom by enabling more high-risk borrowers to get loans. But there is a big catch. 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.

 

 

“I have disabled a car while I was shopping at Wal-Mart,” said Lionel M. Vead Jr., the head of collections at First Castle Federal Credit Union in Covington, Louisiana. Roughly 30 percent of customers with an auto loan at the credit union have starter interrupt devices.

 

Now used in about one-quarter of subprime auto loans nationwide, the devices are reshaping the dynamics of auto lending by making timely payments as vital to driving a car as gasoline.

 

Seizing on such technological advances, lenders are reaching deeper and deeper into the ranks of Americans on the financial margins, with interest rates on some of the loans exceeding 29 percent. Concerns raised by regulators and some rating firms about loose lending standards have disturbing echoes of the subprime-mortgage crisis. As the ignition devices proliferate, so have complaints from troubled borrowers, many of whom are finding that credit comes at a steep price to their privacy and, at times, their dignity, according to interviews with state and federal regulators, borrowers and consumer lawyers.

 

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.

 

Beyond the ability to disable a vehicle, the devices have tracking capabilities that allow lenders and others to know the movements of borrowers, a major concern for privacy advocates. And the warnings the devices emit — beeps that become more persistent as the due date for the loan payment approaches — are seen by some borrowers as more degrading than helpful.

 

“No middle-class person would ever be hounded for being a day late,” said Robert Swearingen, a lawyer with Legal Services of Eastern Missouri, in St. Louis. “But for poor people, there is a debt collector right there in the car with them.”

 

Lenders and manufacturers of the technology say borrowers consent to having these devices installed in their cars. And without them, they say, millions of Americans might not qualify for a car loan at all.

 

A virtual repo man

From his office outside New Orleans, Vead can monitor the movements of about 880 subprime borrowers on a computerized map that shows the location of their cars with a red marker. Vead can spot drivers who have fallen behind on their payments and remotely disable their vehicles on his computer or mobile phone.

 

The devices are reshaping how people like Vead collect on debts. He can quickly locate the collateral without relying on a repo man to hunt down delinquent borrowers.

Vead says that first, he tries reaching a delinquent borrower on the phone or in person. Then, only after at least 30 days of missed payments, he typically shuts down cars when they are parked at the borrower’s house or workplace. If there is an emergency, he says, he will turn a car back on.

None of the borrowers or consumer lawyers interviewed by The New York Times raised concerns about the way Vead’s credit union uses the devices. But other lenders, they said, were not as considerate, marooning drivers in far-flung places and often giving no advance notice of a shut-off. Lenders say that they exercise caution when disabling vehicles and that the devices enable them to extend more credit.

 

 

Without the use of such devices, said John Pena, general manager of C.A.G. Acceptance, “we would be unable to extend loans because of the high-risk nature of the loans.”

A leading device maker, PassTime of Littleton, Colorado, says its technology has reduced late payments to roughly 7 percent from nearly 29 percent. Spireon, which offers a GPS device called the Talon, has a tool on its website where lenders can calculate their return on capital.

[Toothiewabbit]

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[Voodooman]

If you can install it for a $1k iphone, you can do it for a car at very little cost, relatively speaking.

 

I won't mind having it, if it is stolen, just stop paying instalment. hahaha.....

[Vid]

Just go to workshop to get the device remove lor....

[Watwheels]

Coming here soon? LoL....

 

Dun think so coz ppl here pay full cash!

 

In before anyone else who says,"Pay Full Cash!", baby.

[Kac]

Waiting for Snopes now then

[SuPerBoRed]

Just makes me think... If they have such tech.. How do cars still get stolen?

 

If the device can be removed.. Why the owners don't do that?

[Vhtfhwlego]

If come to Singapore and I am the virtual repo man, I will stall the car in outside schools.

 

[Voodooman]

Just go to workshop to get the device remove lor....

If it can be so easy to remove, then no business leow.

[Mrmilktooth]

this device is intrusive... but seems to be very useful...

 

but over here.. not much use ... YET!!!..

[Kac]

Waiting for Snopes now then

Must have posted in the wrong window..supposed to have posted this inside the "Man eats sashimi, gets tapeworm" thread..

 

Anyway, I do believe that if you drive and take a loan, you have a legal obligation to service that loan. Having said that, the virtual Repo should have a set dos and don't when immobilising the car to avoid potentially endangering the occupants)

 

Anyway, more context/update here:

 

http://www.8newsnow.com/story/26550560/las-vegas-mom-sues-over-device-that-electronically-disables-car

 

Edited September 26, 2014 by Kac

[1fast1]

Waiting for Snopes now then

 

On the message board, so not quite the same, but almost as good: http://message.snopes.com/showthread.php?t=25406

 

Seems legit (sincerely, not sarcastically). Been happening for a long time by the looks of it.

[Darryn]

With the proper controls in place as regards when and where the car can be immobilised, the proper amount of time to wait before acting and the proper warnings before immobilisation sounds like a good plan to me.

They have had "virtual helpers" in cars for a very long time already (OnStar right?) and this just seems like a logical extension of that.

 

At the end of the day - if you have trouble getting a loan, and you don't want such a system - buy a cheaper car.

 

 

[skcar]

It's a no no here.

 

1. What happens when u r at a busy junction and then gets disabled?(lives will be at stake)

2. How about afew jokers get disabled during peak hour at our expressways! (jam n more jams)

[Kusje]

It's a no no here.

 

1. What happens when u r at a busy junction and then gets disabled?(lives will be at stake)

2. How about afew jokers get disabled during peak hour at our expressways! (jam n more jams)

 

They should implement it with a 30 min leadtime la.

[Kac]

 

On the message board, so not quite the same, but almost as good: http://message.snopes.com/showthread.php?t=25406

 

Seems legit (sincerely, not sarcastically). Been happening for a long time by the looks of it.

 

Looks like it...The technology is definitely there but the question is whether is it too drastic?

 

*edited too late but the snopes.com reference was originally what I wanted to post in response to the "eat sashimi, get tapeworm thread" but posted wrongly in here instead..

[The_Bear]

I think there is also problem of mindset when paying bills. Why wait for the last few days before settling the instalment? If the cycle is changed to the beginning for the bill period, the cash flow equalizes itself over time.

 

I.e instalment due on the 10th of each month. Pay by the 15th the next month's instalment. So you are always 25 days ahead.

Edited September 30, 2014 by Bavarian