You better think twice before you make a late car payment – even if it’s only a few days. As subprime auto loans continue to rise, auto lenders have resorted to installing devices that can remotely disable a car in an effort to ensure that borrowers are making their payments. For lenders, this method seems genius, but the reality is that vehicles disabled without warning can leave drivers in dangerous situations.
The New York Times’ Dealbook reported that one woman was just a few days late on her payment when she needed to get her 10-year old daughter to the emergency room with a 103-degree fever. The lender had installed a device in the dashboard which prevented it from starting, leaving her in a panic. In another scenario, a borrower’s car was shut down while she was on the highway – almost causing an accident.
Borrowers are considered subprime if their credit score is below 640, and these types of car loans are on the rise – with a quarter of all auto loans being classified as subprime last year. “No middle-class person would ever be hounded for being a day late,” said lawyer Robert Swearingen of Legal Services of Eastern Missouri, according to Dealbook. “But for poor people, there is a debt collector right there in the car with them.”
Borrowers are given emergency codes, which can be used to get their cars running for 24 hours. But many drivers reported that these codes don’t work, and can only be used once a month, which doesn’t help when the car is shut down more than once in a month.
To be fair, banks say that the technology allows them to lend money to people who might otherwise not be approved for a car loan. Because the bank can track their locations and shut down the vehicle, borrowers are more likely to make their monthly car payment a priority. One debt collector tries to reach a delinquent borrower for 30 days before shutting the car down. If he needs to disable the car, he waits until the car is parked outside the home or workplace.
We want to know what you think. Is this GPS technology too ‘big brother,’ or a good way to ensure borrowers are making payments? Let us know in the comments!
Here at Wiesner of Huntsville, we promise our financing department won’t be following you around or turning off your car. Stop by today to check out our exciting lineup of cars!