Remote Car-Kill A Common Loan Tool

An aggressive technique to encourage consumers to make their car payments on time is riding a popularity wave among lenders. The technique is to install something called a starter interrupt device, which remotely prevents the car from functioning.

This tactic can seem cruel. The New York Times looked into the usage and found a mother who was unable to drive her very sick child to the hospital because she had been three days late with her monthly car payment.

On the flip side, the device is facilitating loans to be issued to subprime car customers, those with credit scores below 640. Without such a device, those consumers might have been unable to purchase a car at all.

“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. Using the GPS technology on the devices, the lenders can also track the cars’ location and movements,” the Times story said. “The devices, which have been installed in about two 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.”

The story quoted one attorney saying that the plight of middle-income consumers is very different than poor consumers. ” ‘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.'”