Miss A Payment And Gadget Disables Car

Auto loan lenders are using an annoying beeping box to make sure sub-prime borrowers pay on time. Cars are fitted with a device such as the “On Time” gadget. When the monthly payment gets near due, it starts blinking. On the due date, it starts beeping. If the payment isn’t made, then the device prevents the car from starting. After the borrower makes a payment, the lender gives them a code that resets the box and stops the blinking and beeping. Lenders love the device and say it’s reduced default rates by 30%. Maybe they should invent something like these for houses.

High-tech gear disables car if borrower misses payment [USAToday] (Thanks to Luis!)

Comments

Edit Your Comment

  1. DeafLEGO says:

    Is this for everyone or just ones with bad credit.

  2. The Cynical Librarian says:

    Does that mean the other 70% of those that default on their loans just don’t seem to mind the noise?

  3. tripnman says:

    Let’s hope these aren’t powered by Microsoft’s WGA code – otherwise expect a lot of false positives and cars coming to a screeching halt on a freeway near you! Gives a whole new meaning to software crash.

  4. juniper says:

    That’s the best they can do? Come on, some company has got to come up with a device that shocks you when you put your key in the ignition if you’re past due.

  5. ConsumptionJunkie says:

    The article reports “Sekurus is continuing to introduce products. The latest enhancement is coupling the keypad to a global positioning device. Not only will the car’s starter automatically shut off, but a message will go to the loan holder with its location to make repossession easier.”

    A GPS device that follows drivers seems like an invasion of privacy to me.

  6. humphrmi says:

    @DeafLEGO: from the article “That’s the reality for millions of subprime borrowers whose used car purchase is contingent upon having an unusual option”

    @juniper: My brother’s an auto mechanic, when black boxes came out he used to say “If it’s got wires going into it, and wires coming out of it, I can bypass it.” :)

  7. quagmire0 says:

    Let’s hope it is smart enough to disable the car *after* the next time it is shut off and not while it’s moving. :D

  8. Osi says:

    Unless it is written into the contract, and specifically signed for, these are illegal.

  9. adambadam says:

    Car sharing programs, like ZipCar, where the key is stored in the car, use similar computers to control the engines on their cars so that only authorized people can turn them on. They won’t shut off the car in the middle of the highway, or even when you are stopped at a light, it only controls the engine when it is first turned on.

  10. ↑ ↑ ↓ ↓ ← → ← → B A

  11. thesabre says:

    @Jinx:
    Please cite the law this breaks. If the bank owns the car, they can certainly make modifications to their property as they see fit.

  12. forgottenpassword says:

    ANDDDDDD what happens when the car strands some poor schmoe out in the middle of some desolate winter mountain pass in the middle of a blizzard?

  13. WraithSama says:

    @discounteggroll:
    Excellent. The Konami Code prevails again.

  14. Your car will self destruct in 3…2…1…

  15. laserjobs says:

    Awesome, do this to mortgaged houses. Forget a payment and make the home unlivable.

  16. MelL says:

    As forgottenpassword mentioned, I can see this getting someone into a dangerous situation and thus setting the scene for a massive lawsuit.

  17. beboptheflop says:

    I knew of someone who had one of these (a friend of a friend). She and her husband had declared bankruptcy 2 times and when I met them, they were contemplating declaring a third time. One time before their monthly payment was due, the wife called my friend asking for a loan to pay the car note or they were going to shut her car off. That was the first I had ever heard of such a thing. Needless to say, my friend was smart enough not to loan her the money, the car was shut off and the woman just borrowed money from someone else. A few weeks later the next time I saw her, she was showing off her new Coach handbag she had just bought. Some people will never, ever, learn.

  18. Lucky225 says:

    OMFG, it’s like house arrest for your car. Get real, it’s not going to be that hard to bypass this thing.

  19. Myotheralt says:

    great, i have no money to make the payment, but i will next week if i can get to work tonight. the car wont start and noone can give me a ride. now im broke, unemployed, have no car (but still have to pay the difference) cant get into town to get a new job.

    um, not in my car

  20. forgottenpassword says:

    Imagine an apartment building that has electronic locks on all the windows & doors that lock the moment your rent is due & wont let you back in!

    I hate draconian shit like this. And I am a person who is financially responsible, has no debt & pays his bills like clockwork.

  21. socritic says:

    Welcome to tomorrow. This device protects the auto loan industry. The reason we pay high premiums is because people default. This way the auto loan industry gets to do both. I think not only is this anti consumer, i think that if the terms of the loan require that you get one of these devices you should refuse this loan, unless it offers a “reduced risk” discount.

  22. differcult says:

    @myotheralt: Then you shouldnt have bought a new car that was out of your price range.

  23. r081984 says:

    This is a great idea.

    To the stupid argument of being stuck in a dangerous situation all I can say is when you know your bill is due and that you are not going to pay it then DON’T DRIVE INTO A DANGEROUS SITUATION. This thing beeps for a whole day to tell you that it will shut off your car.

  24. Paintbait says:

    Oh yeah that’s a good idea, miss a payment, turn their car off and you’ll never get another one.

    Am I the only one who sees this as a self-destructive plan?

  25. TheUncleBob says:

    Pay your bills on time and you won’t have to worry about it.

  26. Jthmeffy says:

    I pay all of my bills on time and never miss any payments…

    BUT if I was told they were gonna install this on my car (after I signed everything that is), I’d laugh all the way to the toolbox.

  27. SonicMan says:

    Just great. I would hate to get screwed by this. Hasn’t anyone here had problems with banks getting payments?

    If what happened to my Home Equity loan happend to my car loan, they would of shut off my car. I paid GMAC for 2 months, They never got a payment from me though. But the money was electronically sent to them. The error was on there end. See The money was not in my account, and it WAS sent to them. But it was in GMAC limbo and not my account. Took 3 months to finally fix.

  28. Pylon83 says:

    @TheUncleBob:
    Exactly. The only people this will effect are those who a) have such poor credit (Read: High risk) and b) contractually agree to it as a condition of buying the car. I think this is a great way for the lending industry to protect itself against high-risk loans, while still allowing those people to buy cars. If they live up to their end of the bargain, no problems. If they don’t, they deserve it.

  29. MelL says:

    @r081984: Yeah, because danger has a big shiny sign saying ‘Danger here!’ so we all know where it is at all times. Why didn’t I think of that?

  30. SweetBearCub says:

    To add some perspective to this, let’s have some first hand experience. I bought a van from a BHPH back in 2002 which came with a similar (but older) system.

    First, the brain of the system was mounted under the dashboard. The only visible part was a 1 inch lead with an IR sensor near my headlight switch, and the remote for the system, which lived in my glove box.

    Every week that I made a payment, I was given a 6 digit code to enter. Once I typed the code in, the system beeped twice and that was all I had to do.

    If I was late making a payment, the system would begin beeping for about 1 minute after the car was started. 24 hours later, the car would fail to start, and the system would beep every few seconds.

    At no time would the car stall on the road – The system only controls the initial startup of the engine.

    If it was an emergency, I had a code that I could use to override the system a single time for 24 hours.

    It had no GPS tracking or triangulation systems to locate the van, so my privacy was protected.

    It also served as a passive anti-theft system, which got me a discount off the insurance. (There is a sequence that must be used when starting the van, otherwise the system will make it appear that the battery is dead.)

    If I had a need to let someone else drive the van, I could enter a pin on the remote and press the valet button which would disable the entire system for a few hours. (I forget how long..)

    All in all, it was a very unobtrusive system, and it allowed the BHPH to give me a very nice van for what I was paying. Without it, they could have given me a much crappier vehicle, as a way of protecting themselves from excessive loss if I failed to pay.

  31. It reduces default rates by 83%, not 30%: “The device lowers default rates for subprime auto loan borrowers that typically run about 30% to about 5%.”

  32. vitonfluorcarbon says:

    I don’t know if I hate this thing or like it. I pay my bills on time, but sometimes I rarely completely forget to pay one. I certainly would not want my car to not start because I haven’t paid (even though it “warns” me…) What if I’ve been traveling so did not see the warnings when I went to the Airport and parked my car?

    People need to be financially responsible, but this seems to be too much. Don’t they already rape people with high rates if they have poor credit? Uncalled for and unfair to those who already pay the most for credit.

  33. loueloui says:

    I’m all for people paying their debts, but devices like this seem too draconian for my tastes. What’s next? The car will lock you in and not let you out until you insert your credit card?

    Somehow it seems that the simple answer to this is don’t lend money to people who don’t pay their bills and not some gagdget that chips away at our personal privacy.

    Think about it. We’ve been told for forever that finance charges are high to make up for losses by people who don’t pay their bills. That’s just built into the cost so there. Well, now that this device is here rates should drop like a rock right? Wrong. This business will most likely keep those savings as profit, which means that they are using this as a tool to offset their losses by impinging on our rights.

    That’s what’s wrong with our country. Just because you find some group of morons who will let you degrade them for the sake of money, doesn’t mean that it’s okay. Even worse, it contributes to the decay of society. Eventually these things will become the norm.

    I would ride a bicycle before I would allow this kind of garbage in my vehicle.

  34. AmbroseP says:

    @discounteggroll: Haha, that made my day. Errm, evening.

  35. sleepydumbdude says:

    Are these different than the ones they had about 2-3 years ago. I worked at the safe house and a guy in there disabled one for one of the guards.

  36. SweetBearCub says:

    @vitonfluorcarbon

    “What if I’ve been traveling so did not see the warnings when I went to the Airport and parked my car?”

    Then I hope you arranged to have the car loan paid on while you were travelling!

    Seriously though.. Most of these devices, such as the one that was on a vehicle I owned, had a one-time use emergency code that gave you 24 hours of vehicle operation if you needed it.

    Beyond that, you’re screwed, and if you don’t pay your bills, that’s the way it should be!

  37. bohemian says:

    This is such a good idea because sub prime auto lenders who prey on the high risk usually poor buyers are such honest businesses to begin with.

    I would rather see some more community based borrowing that uses another form of assuring high risk borrowers pay than letting skeezy used car operations take away more rights from people.
    Community lending tied to consumer education workshops combined with draws taken out of paychecks would be a better option.

  38. steve says:

    This seems like a good middle of the road solution. I don’t think its overly draconian either. Yes, lenders need to be particularly wary of whom they lend money to, but on the other hand, some people with bad credit or past bankruptcies want to build good credit and become more financially responsible. If those persons would previously have been precluded from obtaining a car loan, and putting this device in a car allows them to get one, I can’t see a big problem with it.

  39. PølάrβǽЯ says:

    @thesabre: By that logic, if the bank owns your house, they can come in and do anything they like in it if they want?

    The bank loans you money. The car is simply collateral for that money. The car doesn’t belong to the bank unless you STOP paying on the loan. Yes, I CAN cite laws regarding when a loan or mortgage holder can access their property once the buyer is in default.

  40. PølάrβǽЯ says:

    @discounteggroll: I remember it as uu dd lr lr ba ba select start.

  41. thesabre says:

    @aaron8301: The car doesn’t belong to the bank unless you STOP paying on the loan.

    Here I thought that’s what this article was about. That’s why I said they own the car, because the article clearly discusses when you don’t make payments. Not random times throughout the day. Not on Tuesday and Wednesday… but when you don’t pay for it.

    Hence, I stand by my comment. When you don’t pay for it, they can do whatever the hell they want with their car.

  42. thesabre says:

    @aaron8301: The car doesn’t belong to the bank unless you STOP paying on the loan.

    Silly me, that’s what I thought this article was about. You don’t pay for it, they shut it off. That’s why I said it’s their property because the article is specifically about not paying for it.

  43. suzy-q says:

    I guess the idea stemmed from having to take a breathalizer test to start a car?

    It does make sense though. If you don’t pay your cable/utility or other such bill, they turn your services off. It’s not really that different.

  44. jusooho says:

    @aaron8301: the “select” and “start” were never part of the code. That part just starts the game and switches player count.

  45. VeeKaChu says:

    @SweetBearCub:LOLs “un-obtrusive”.

    Every week that I made a payment, I was given a 6 digit code to enter…
    If it was an emergency, I had a code that I could use to override the system…
    There is a sequence that must be used when starting the van…
    If I had a need to let someone else drive the van, I could enter a pin on the remote and press the valet button…

    How is all of that required, and unique code-entering “un-obtrusive”? Why, it’s the very definition of “obtrusive”.

  46. @bohemian: I agree.

    Plus can’t spend it if you don’t have it

  47. @differcult: then i guess you have been in perfect health all of your life and never been sick, had a loved one die unexpectedly, been laid off, had a natural disaster come and rob you of ALL of your belongings, INCLUDING YOUR JOB. I have folks at Enron, and citizens of New Orleans who BEG to differ.

    Your narrow-minded callousness is disturbing at the least

  48. Tolgak says:

    This is a sign that the days of completely owning the things you buy are coming to an end.

    As of now, it’s with digital media.

    I really hope it doesn’t get to the point when cars equipped with these are the only things you can get your hands on.

  49. i would never accept a car that had something like this attached to it. NEVER. I would find another way to get myself a new car.

  50. P_Smith says:

    What’s the difference between this piece of junk and an ankle bracelet mandated by a court?

    It’s not mandated by a court, but you’re treated as a criminal anyway.

  51. DrCrippen says:

    Interesting device. Works well in theory. But what if the device malfunctions? What if you pay your bill, enter the code, and your car still won’t start? Something tells me the loan company isn’t going to foot the bill for towing your car someplace to have the box repaired. No, this is a terrible idea.

  52. Buran says:

    @P_Smith: The difference is that one is a consequence of having committed a crime and you are compelled to wear it. This is not something you are coerced into. You are free to find another lender, or not buy a car.

    They are similar in that you should have thought of the consequences of having bad credit/of having committed a crime, however.

  53. Buran says:

    @corporateamericabites: Well, that’s the problem. Why do you need a NEW one if your credit is so bad that you get offered a car only if you accept one of these, from lender X? Find an inexpensive used one for a few grand…

  54. chrisjames says:

    @Tolgak: Er, correct, these are only placed in cars that you don’t completely own. Cars that you pay for in full wouldn’t come equipped with this. To whom would you owe obligation? If anyone is thinking the state, then think twice.

  55. wackyvorlon says:

    I’d love to see exactly how they intend to stop people from just ripping the box out. Or, better yet, neutering it. How long will it be before we see tutorials online for this?

  56. MelL says:

    This part in the article really caught my eye:

    “Another competitor is PassTime USA in Littleton, Colo., which uses a mix of keypad and wireless systems. President Frank Jacobsen says he thinks the credit crunch will “make a difference” in sales, along with payments from the federal economic stimulus package that could boost car buying.”

    My God, I hope the stimulus *doesn’t* boost car buying! Just what we need, more people jumping on the heap of bad credit.

  57. bwd1971 says:

    Some of you act as if these customers should be offended by the implication these things create. They know that they can’t walk into a new car lot and buy anything. They are the one’s that put themselves in these financial situations. Matter of fact, half of them don’t even care about their own financial situations. Why else would they be shopping a car lots that advertise “We Tote the Note” and “Buy Here, Pay Here”?

    They just want to get a car for a few months. Then they’ll stop paying the note and the “repo man” will come and get it back. The person that’ll really lose out is the guy that sells them their wheeel & tire & radio package on weekly payments! That stuff never makes it back to the yard when the repo guys pick the vehicle up!

  58. Geekybiker says:

    I like the idea personally. If it is reducing the default rate that much these people must really have the cash. Either a reminder is helping them decide between the car and another 40 of old E, or the people going into the program are self selecting as responsible people who got themselves in a bad spot. Either way anything that reduces defaults is good in my book. Presumably they get some sort of rate discount for this thing.

  59. pine22 says:

    @Buran: i guess its committing the crime of being irresponsible with money lol
    ————————-
    this is strictly for people who have proven themselves to be bad with money. i think its a fair move by the lenders, if someone has a poor payment history, then they don’t really deserve the benefit of the doubt.

  60. chrylis says:

    @forgottenpassword: You can purchase a car free and clear and not have to worry about making car payments or having one of these devices installed.

    As for liability issues, at least the person has a fair warning when this thing is going to be activated; if my battery goes dead when I’m in a bad area of town and something happens, the manufacturer isn’t liable either, and I had a lot less notice.

  61. chrylis says:

    @loueloui: And the fact that you’d ride a bike first makes you more responsible than the target market (or, rather, their customers).

  62. MelL says:

    @chrylis: A battery going dead or some other mechanical failure is a bit different from a device which is intended to disable a car.

  63. captainleah says:

    if you are not going to let me post please delete my account

  64. Cliff_Donner says:

    And I thought that “fasten your seatbelt” alert was annoying and instrusive . . .

    Don’t know that I’m necessarily against this, but I’m not in favor of this as a substitute for lending companies doing their research and only making loans to “responsible” people.

    This does not seem to be too far-flung from the ethics of those “Payday Loan” establishments.

  65. forgottenpassword says:

    I just see the auto loan industry LOVING this & if they had their way (never know… they just MIGHT!)…. they’d do this for every loan/car they sold (except to the rich of course).

    As modern technology advances, personal freedom recedes.

  66. SegamanXero says:

    this isnt new, ive seen them down in atlanta GA, i think a place called drivetime has them in their cars. basicly its like renting to own or something, and when you make your payment you get a code to punch into the car to keep it from shutting off.

    unfortunatly ive seen these devices go defective on people who paid their payment on the car… basicly the car wont start and there wont be any dangerous stalls on the highway or trafic lights…

  67. tcp100 says:

    @forgottenpassword: How does freedom “recede”? I see this as a way for someone with horrendous credit to walk out with a car dealership with something versus nothing. It might even encourage him/her to pay their obligations for once.

    Those of us who pay their bills (and even those who “forget” now and then but are generally responsible overall) will never, ever deal with something like this. Car dealers have enough trouble selling cars as it is, do you think someone with good credit and the ability to pay wouldn’t just go elsewhere?

    (And please don’t tie this in to black boxes vis a vis insurance; auto insurance is state mandated – buying a new car on credit is not.)

    A perfectly reliable used car can be had by just about anyone for about $2000. Please tell me how this would inordinately hinder someone’s “freedom” if they didn’t have a proven track record of repeated irresponsibility first, thereby themselves hindering the “freedom” of every other person who pays on time?

    I’m always amazed at people who are incensed when their car gets reposessed. YOU DIDN’T PAY FOR IT, IT’S NOT YOURS. Jeezus.

  68. HawkWolf says:

    I fifteenth or whatever the fact that this thing isn’t that terrible. “What if I forget to pay my bill!?!”

    I recon the device will start to beep like crazy, in which case you phone up the lender, pay the bill, get the code, and stop the termination of your ride?

    How are you going to FORGET to pay your bill with this thing, unless you don’t drive your car often enough that you get in it and it’s been disabled without you being warned about it?

    Also, it’s like repossession, except much less extreme, which to me seems good. I’ve heard repo horror stories about cars being tailed and yanked when the owner gets out to buy gas, go to the store, stop at a friend’s…

  69. balthisar says:

    Dudes, this is VOLUNTARY. Much like getting a loan in VOLUNTARY. No one surprises you with this crap after you get the loan. You know it up front. It’s YOUR decision. Customer satisfaction (both the dealers’ and sub-prime borrowers’) is very high.

  70. @forgottenpassword: Please define “rich”. Just so we know what the standard is to get into “the club”.

  71. @balthisar: Wait, you mean they don’t put your nuts in a vice after you sign your paperwork and make you install this yourself while they hold a knife to your family’s throat? I highly doubt that. /sarcasm

  72. JustThatGuy3 says:

    @forgottenpassword:

    The market for these units are those Buy Here Pay Here auto lots that sell used cars to low income/poor credit buyers. The default rate is huge, and this is a way to hopefully reduce that.

  73. JustThatGuy3 says:

    @forgottenpassword:

    Honestly, if a car dealer told me that I’d get a material discount by putting one of these in, I’d do it, no problem.

  74. FreeMarketGravy says:

    @P_Smith: No, you’re not treated like a criminal. You’re treated like what you are: a stranger that the lender doesn’t know they can trust.

    Until you pay off the car in full, it’s not yours. You’re involved in a business partnership with the car’s lender/seller as defined by the contract you sign. Until you pay off the vehicle in full, the car does not belong to you and the owner can do whatever they want to the car within the terms of the contract, which this device would be.

    @forgottenpassword: And the problem is? The vehicle isn’t yours to begin with, so you have very little “freedom” as is. Defaults on car loans and outright car theft is what happens when people overstep the boundaries of what little freedom they have with regard to vehicles they are borrowing/leasing/renting. When this box locks you out of a car that you’re paying off on time, then come see me. Otherwise, as long as you pay off your loans on time, you have nothing to worry about.

  75. I think car loan lenders should start verifing income, and only giving out car loans to people with average or above credit. This box is completely silly.

    How are the people who owe you money going to get to work?

    I personally would never sign up for this. I’d buy a cheep used car before I ever did this. If you can’t afford the car you shouldn’t have been giving the loan. Banks are making bad lending choices.

    What is going to happen? People who can’t afford all their bills will now default on mortgages to keep their cars running.

  76. FreeMarketGravy says:

    @PrestonBerryworth: These are the problems you fall into taking out loans you can’t afford to pay back to buy things you can’t afford to keep.

    I understand what you’re saying, but it’s the individual’s responsibility to govern their financial decisions, not the banks or the corporations’ responsibility to babysit anyone’s checking account or hold anyone’s hand through a loan application. I learned when I was very young the concept of “don’t spend money you don’t have.”

  77. mgy says:

    “I’d be delighted to come pay you, but my car won’t start”

  78. JustThatGuy3 says:

    @PrestonBerryworth:

    The people getting these ARE buying cheap used cars. It’s not your local Jaguar dealer that’s putting them in, it’s “Bob’s Side of the Road Used Car Hut” that’s doing it. People buying $2999 cars with no money down at 20% interest.

  79. mike says:

    A lot of people here rarely think as an investor.

    For an investor, there is a great amount of risk when lending to a sub-prime borrower. They are willing to take the risk if certain conditions are in place. To not do so would be foolish to say the least.

    From an investor’s perspective, this is a great idea. However, if it’s easily by-passed, there’s no point to it. Many investors are attracted to the idea of making large gains assuming that the borrower makes their payments.

    Personally, I’m more conservative with my investments. But to each their own, I guess.

  80. Pithlit says:

    This sleazy and low, and sadly I’m not a bit surprised some are defending it. If a customer is so risky that it warrants something this drastic, then maybe the company is better off not giving the loan in the first place. The customer would be better off arranging transportation some other way, and we’re all better off not having our consumer rights chipped further away as the middle class continues to shrink. If people think this sort of thing doesn’t roll uphill in some form, they’re mistaken.

  81. Pasketti says:

    I am a geek, so the first thing I thought when I saw the picture was:

    Six digit code. Four digit keypad. That’s 4096 possible codes. I could make a Lego Mindstorms robot to brute-force the combination in a few hours.

  82. JustThatGuy3 says:

    @Pithlit:

    So, what you’re essentially saying is:

    It’s better to tell people with poor credit that they can’t have a car loan at all, then to give them the car loan and have a way to get the cars back from people who renege on their obligations.

    By the same token, some prime mortgages default – should lenders stop making prime mortgage loans as well, and require everyone to pay cash for their homes?

  83. FreeMarketGravy says:

    @Pithlit: I repeat: “it’s the individual’s responsibility to govern their financial decisions, not the banks or the corporations’ responsibility to babysit anyone’s checking account or hold anyone’s hand through a loan application. I learned when I was very young the concept of ‘don’t spend money you don’t have.’”

  84. @Lucky225: It won’t be that hard for someone with resources, education, and/or mechanic/electrician friends. But a lot of those people probably aren’t high-risk car borrowers.

    I’m sure it’s legal (at least in my state) if specifically in the contract, but I’m not such a fan. I know (from experience) a lot of people getting sub-prime car loans have no idea what they’re signing or what it means. This is one more way of working around the problem (and treating these borrowers like irresponsible children subject to constant monitoring, which is demeaning) instead of actually SOLVING the problem through financial education.

    Self Help Credit Union, in NC, when I was there, had the lowest mortgage and small business loan default rate in the entire state and they dealt in basically NOTHING BUT high-risk loans … which all came with financial education classes! And their defaults were lower than the mainstream banks doing only or primarily prime lending. This is a workaround, not a solution.

  85. mariospants says:

    I don’t like this system at all, not because I don’t think unresponsible people don’t deserve it but because I can just see this becoming ubiquitous in the future. People don’t actually “own” their cars until they’re completely paid down, which (given the fact that most people seem to be upgrading their car every 4-5 years) means that you probably never really ever own a car in your entire life until the day you sell it or trade it in.

  86. FreeMarketGravy says:

    @mariospants: What? Are you suggesting no one ever completely pays off their vehicle? Because that’s simply not true.

    And as far as upgrading every few years, if this system becomes the new standard, then it’s the price you pay for wanting to upgrade every few years instead of doing what I and many others do: buy a vehicle, pay it off, take care of it and let it take care of you.

  87. Erwos says:

    @JustThatGuy3: Exactly. More typical stereotypical Consumerist arrogance: “choices I don’t agree with shouldn’t be allowed”.

    Same thing with credit cards – you want to cap the risk, you’re going to see a serious downtick in the number of poor people who even get credit cards.

  88. laddibugg says:

    @Pasketti:

    heh, me too. Though I think the code has to be activated by your payment.

  89. loganmo says:

    @mariospants:

    Not true. The car loan gives the lender a lien against the vehicle. The purchaser still owns the car.

  90. Pithlit says:

    @JustThatGuy3:Do you think companies should give loans to anyone whatever their credit risk? The bleeding heart liberal that I am still recognizes that there are credit risks that are beyond reasonable.

    No, what I’m saying is that just because there are people who have trouble paying their bills, whether through unfortunate circumstances or irresponsibility, that doesn’t mean companies get to do whatever they please to exploit them. Such a device on the car is demeaning, even if the person did agree to those terms. What I’m saying that if a company is willing to take the risk, they should do so without these ridiculous devices. If the customer is simply too big of a risk, then the only reasonable response is to deny them the loan, not set them up for spectacular failure in the form of a disabled car sitting in their driveway, or out on the road somewhere. What I’m saying is that the existence of these devices doesn’t bode well for anyone. I don’t think they will be on every car next week, but I do think that companies in general look at these things and see their success and think about how they can incorporate things like that into their own business model. In other words, every time something like this happens, it lowers the bar for everyone.

  91. Pithlit says:

    @FreeMarketGravy: An I repeat: Accepting companies who behave this way, regardless of how deserving the people may be, lowers the bar for the rest of us. If you think companies will only reserve intrusive policies for bad risks forever and ever, you’re wrong. We accept them for the bad risks. It’s only a matter of time before it’s accepted for medium risk people, most of whom got that way due to unfortunate circumstances rather than flat out irresponsibility. They’re testing the waters by starting with the bottom of the barrel. But they aren’t the only ones who default on loans. I’m not just talking about this specific device, but anything that is intrusive.

    Loan companies already have recourse for people who don’t pay their bills. It’s called repossesion. If that isn’t enough to cover the risk to their satisfaction, then maybe they shouldn’t be making the loan in the first place. Responsibility goes BOTH ways. It’s not just up to consumers to be responsible.

  92. JustThatGuy3 says:

    @Pithlit:

    1. I don’t think that banks should give loans to everyone.

    2. These lenders AREN’T BANKS! They’re used car dealerships that focus on low-end used cars for the, uh, “credit-challenged.”

    3. The repo rates on these loans are really high. These devices make credit risks that would be “beyond reasonable” more reasonable.

    4. Sure, I suppose we could say “poor people shouldn’t even have the CHANCE to buy a car, but that’s a pretty arrogant position to take.

  93. Pithlit says:

    @JustThatGuy3: To point number 2: Banks, car dealerships, whatever. They’re extending a loan. I think it’s clear what I meant.

    To point number 4: I’m not saying that poor people shouldn’t have loans. I’m saying that they shouldn’t have to endure draconian measures to get them. (For one thing, it isn’t just poor people who are high risk, so your attempt to paint my position as anti-poor is disingenuous) My whole point is that banks/cardealerships/whoever shouldn’t be allowed to go to ridiculous extremes to mitigate the risk on their end. The end result is they’ll get the car back anyway, so all this does is add a measure of humiliation. Nothing more. I do think everyone is better off without these things existing. It won’t mean fewer people get the loans. They’ll continue to loan to high risk clients like they always did, because there is much profit in it. The usurious rates they charge more than make up for the risk.

  94. FreeMarketGravy says:

    @Pithlit: It only lowers the bar for people who are risky loan prospects.

    But let’s assume you’re right and every car dealership puts these boxes in every car ever and doesn’t remove them until you’ve paid off the loan. Then what? You pay your loan, the box sits in the car and… that’s it. HOW AWFUL.

  95. FreeMarketGravy says:

    @Pithlit: Humiliation is subjective. If Man A wore a neon pink tank top and silver 3″ heels in public, he might be mortified. If Man B did the same, he may be OK with it. And that’s a bizarre unrealistic example.

    If this box being in your car would humiliate you, that’s your problem. I wouldn’t care one way or the other as long as it wasn’t in my line of sight while driving.

  96. cerbie says:

    @Tolgak: um, wouldn’t that eventuality require that you not be able to buy a car? It’s not a matter of owning, here, but of making a choice to attempt to own what you can not afford.

    Perfectly good, serviceable cars for well under $1000 are abound. If I couldn’t do better ($2600 off the lot, parents willing to float me a little bit), I would get something cheap-but-OK until I could. I would not get something expensive enough to be worth installing such a control system.

    Then again, my ideal car would probably not have over a $2k asking price. I need to think like a proper consumer, I guess, and get into the shiny lettering and fast-talk.

  97. BigElectricCat says:

    Seems to me that if every car sold in the US had one of these installed, there’s no longer any need for repo men to exist.

  98. Pithlit says:

    @FreeMarketGravy: Yes! How awful! I’m sorry, but duh. Most people aren’t going to like it. We all get treated like criminals. We all have a box that has the potential to screw up and strand us somewhere. Yes. It would be pretty awful.

    But I’m not even arguing that that would happen, necessarily. I’m arguing that letting companies exploit and intrude on the rights of one segment of the population DOES affect us all. People who think we all exist in neat little static groups, and that something that affects one won’t affect the rest of us are flat out wrong. If we give lenders such specific and direct control with one group, they will abuse it, and they will do it because they got away with it already. For example, most of us pay higher rates in insurance because of practices started by the insurance industry that were justified by high risk. I could go on with other examples as well.

    My whole point is there has to be a limit, and that limit should apply to everyone. The second you give them an inch, they will push for every mile they can get.

    They don’t look at us bill paying responsible people and think we’re so wonderful, and refrain from fleecing us out of the goodness of their hearts, to reward us. If they think they can get away with it, they will treat us like that, too. They don’t fleece the high risk people to punish them, as some form of judgment. The lower their bar is, the more they’ll be able to get away with exploiting us for every dollar they can get, too.

  99. FreeMarketGravy says:

    @Pithlit: You’re imagining a risk where none exists.

    And no, you’re not being treated like a criminal unless you’re being detained and cuffed. You, if you had one of these boxes, are being treated like what you are: a stranger that the lender has no way of guaranteeing they can trust to pay back their loan on time.

  100. Pithlit says:

    @FreeMarketGravy: I’m sorry, but that is a ridiculous argument. Giving companies carte blanche to treat us however they wish in order to increase their profit and giving them no limits, because humiliation is subjective? Pffffft. Try again. Most people who get stranded on the side of the road because their boxes shut their car off would beg to differ from you, whether they’re one of those high riskers, or salt of the earth bill paying types. Those who would be tired of having to punch in little numbers every month so their car will run would beg to differ with you, regardless of what group they’re defined as. People with clean records who still have to pay more for their car insurance because of policies justified by high risk beg to differ with you right now.

  101. Pithlit says:

    @FreeMarketGravy: I’m willing to bet that most people will not view the device in the manner you do, even if they think it’s okay for high risk people. You simply aren’t going to convince anyone that having such a device on their car is benign. I’d be willing to bet that most people would not want one on their car, and anyone who thinks otherwise is delusional.

  102. FreeMarketGravy says:

    @Pithlit: Please present to me statistics about how many of these boxes have or are expected to strand motorists who pay their loans on time or don’t try to argue with me using purely speculation.

    And yes, humiliation is subjective. It’s ridiculous to not impose methods to protect lenders from intentional defaults just because some people care a little too much what others think of them.

  103. FreeMarketGravy says:

    @Pithlit: Maybe you’re right, maybe you’re wrong. Until you can prove otherwise, I’ll choose to believe the latter.

  104. Pithlit says:

    @FreeMarketGravy: Why should I present those statistics? It’s a man-made device, and man-made devices do malfunction. It doesn’t matter how many times it happens. That the risk is there is enough for me to know that I do not want it on my car, whether I’m a low life who doesn’t pay her bills, or an infallible saint who always does.

    It’s ridiculous to for them impose such intrusive methods to secure their risk. Humiliation isn’t even the only reason why this is wrong, or the most important reason why it’s wrong. You’re locking on my humiliation comment, because you can’t argue the rest of my points. Having such a device on one’s personal vehicle IS an intrusion. If I don’t pay my car payment, they can come and get my car. If I’m not at the level that I’ve completely defauled, then they can report it to the credit beurau. Not shut off my car. This direct control of when I can and can’t drive my car would be an intrusion.

    I challenge you to find too many people who think otherwise. They’d be few and far between. And they’d better get off their duffs and get their states to make this practice illegal, or they may find themselves with such a device on their car in the future, because they were a week late on their payment one month because it got lost in the mail.

  105. Pithlit says:

    @Pithlit: The last two paragraph should be connected. By “people who think otherwise” I meant people who don’t think such a device would be an intrusion on their own cars.

  106. tmlfan81 says:

    High risk borrowers are already being charged excessive interest rates in order to obtain financing. In most cases, a minimum down payment is required to enter into the agreement and is still subject to employer verification and reference checks where required.

    Obviously the set criteria for obtaining financing has its hurdles, yet somehow a sub-prime borrower is allowed to take out a new loan and get yet another new [or used] car. Some blame does have to be put on the industry itself for going out and lending to these people despite the obvious risk associated with the borrower.

    Going as far as installing a device that would disable the vehicle after non-payment is a petty way to get borrowers in line with the program and make timely payments. OK, genius, if your borrower can’t drive to work to make the money to pay the bill, how are you going to collect anyway?

    In court?

    Rather than make a change on their end and up their lending standards, the sub-prime lenders put a band-aid on the situation. They don’t change their behavior and they end up smelling like a rose in the end. People that pay on time or have perfect credit again hail such a move as a smart way for a lender to protect themselves when lending to people that aren’t likely to pay on time, if at all.

    Honestly, lending money to a person that isn’t likely to pay at all, or runs the risk of paying late always is highly unintelligent. Sure, you see the dollar signs of all that added interest and late fees, but that’s just preying on people’s situations and possible stupidity.

  107. FreeMarketGravy says:

    @Pithlit: Sure, it happens. Every device malfunctions and if you swore off every electronic device that malfunctions even once, you wouldn’t have a TV, refrigerator, cell phone, landline phone, etc.

    “You’re locking on my humiliation comment, because you can’t argue the rest of my points.”

    No, I’m asking about it because you don’t get that humiliation is not a concrete concept.

    “Having such a device on one’s personal vehicle IS an intrusion.”

    No, it isn’t, because until it is paid off, it is not YOUR personal vehicle. It is the lender’s vehicle that they are letting you drive.

    “…they may find themselves with such a device on their car in the future, because they were a week late on their payment one month because it got lost in the mail.”

    And they’d deserve it for not mailing in their payments early like any responsible person does.

  108. Pithlit says:

    @tmlfan81: Exactly. If a company is going to decide to take that risk because they can get the higher interest rate, then why should they not also incur extra risk? Allowing them to install these devices in order to mitigate their risk only encourages them to relax their standards even further. They justify the higher rates because the customers are higher risk, then mitigate that risk with these stupid devices? I don’t get why people are defending that. Wait, I think I do. It’s punishing those low life irresponsible people, so it must be good. Why bother thinking about the consequences of reckless lending on the rest of us? Irresponsibility is being punished. That’s all that matters.

  109. Pithlit says:

    @FreeMarketGravy: They’d deserve to have their car shut off because the payment got lost in the mail? Oh, man. Thank you for letting me know that I’ve just been wasting my time with you. I deserved it.

  110. Pithlit says:

    @FreeMarketGravy: Despite the fact I’m wasting my time, I have to address this: Yes it most certainly is your personal vehicle, legally. Even if you lease. Their are rights that protect people, even if they don’t own their car, free and clear. They can’t come and dump garbage in the back seat just because I was late on a payment, for example. Just like a landlord can’t just enter a property they’re renting on a whim, even though they own it. There are procedures they have to follow if a renter defaults. A car dealership can’t come and demand they borrow your leased vehicle for the day, because they own it, can they? If you buy or lease a car, it’s legally your car, even if you miss a payment or two. It’s yours until they repossess it. Demanding the use of these devices is an intrusion on that ownership. If they can enforce such rights against ownership for them, then none of us truly own our cars anymore. It will indeed become the way you mistakenly think it already is.

  111. Orv says:

    @Pithlit: If people really do find them as humiliating as you say, then you have nothing to worry about. They’ll simply avoid patronizing lending institutions that try to institute them, and the idea will die on the vine.

  112. consumerd says:

    Seems like the thing to do would be to buy a vehicle you can pay off in cash.

    least then if all it does is takes you from point a to point b, you can live with that till you can pay for better.

  113. Pithlit says:

    @Orv: Except my opinion isn’t really based on selfish motives. I have great credit, myself, so I’m sure I have nothing to worry about at the moment. If something is wrong, then it’s wrong across the board. It’s wrong for companies to intrude on the ownership of the products they’re selling just so they can tap into an even riskier market and profit additionally, without actually incurring the additional risk.

    And, it certainly doesn’t seem as though people are avoiding them, does it? That’s not good, because other lenders are looking at this and thinking about how they can incorporate something like this into their model. It’s naive to think otherwise. The very lenders that we Responsible Good Customers use. The dealerships that did this completely changed the notion of personal car ownership. Now that that’s out of the bag, other dealerships and lenders can easily say “But you don’t really own your car now, do you? We do” and use that justification for all kinds of loveliness that they couldn’t get away with when cars were considered our own even before they were paid off. I’m not just worried about these stupid devices.

    The corporate trend across the board is to chip away at our rights as owners of products, and this car device is just another example of that, and it doesn’t matter that right now it’s only affecting high risk borrowers.

  114. Orv says:

    @Pithlit: I understand the argument you’re making that this is a slippery slope. I just don’t buy it. By your logic, requiring high-risk credit card customers to put up a deposit should have quickly evolved into all credit card customers having to put up a deposit, but that hasn’t happened. This is just a way for places that deal with particularly high-risk customers to mitigate that risk. It’s not going to head up-market because loan defaults aren’t that big a problem in other parts of the market. This is a business decision, not some kind of conspiracy against consumers.

  115. Pithlit says:

    But I’m not just arguing the slippery slope. I’m saying it’s flat out wrong, even when they do it to high risk customers. I only bring up the slippery slope argument to appeal to those who don’t care that it’s only the high risk population. It’s possible it may not happen as I fear it will, but the only way to ensure it doesn’t is to tell companies that it goes too far, period. Whether people are driven to do that from fear, and not because it’s simply the right thing to do doesn’t matter to me.

    As to your second argument, well, for one thing, a deposit isn’t an intrusion. I’m not against offsetting risk. I’m against using intrusive measures to do so. Rigging a product a person buys so that you have control over how and when they use it is a far cry from a deposit.

    To your third point, of course it’s a business decision. It doesn’t make it right. Plenty of business decisions harm us, and we have the right to tell a company to knock it off, and we do so all the time. It really doesn’t matter if this decision never affects the rest of us directly. They’ve changed the terms of ownership. It isn’t a conspiracy to claim that businesses will do what they feel they can get away with to make an extra buck.

    You could be right and this would never affect anyone else except for the high risk consumers. What if you’re wrong? Your hunch is no more based on anything concrete than mine is. And because companies have indeed extended policies that were initially based only on high risk customers to the rest of us (credit card companies, insurance companies, just to name a couple), I’d say that my hunch has some weight to it. I’m not claiming it will come in the form of a control device in the car. I’m saying it will come in other, smaller, forms that will whittle away at our expectations as owners. I don’t think my hunch is all that far off to think that every time a business model succeeds at something like this, that others aren’t taking notice. Like I said, I think its naive to think otherwise.

  116. Orv says:

    @Pithlit: Without devices like this they wouldn’t be offering these people any loans at all. The people who have these devices are making a rational decision that a car with strings attached is better than no car at all. I respect their ability to make that decision. Why can’t you?

  117. barty says:

    @quagmire0: It probably just disables the starter itself. So it just interrupts the circuit between the ignition switch and starter relay.

    Easy to bypass if you know how to do it, but I imagine that most of the people having these installed in their vehicles wouldn’t have the know-how or motivation to do so. They’d probably be paying their bills on time if they did.

  118. tmlfan81 says:

    I think the whole point is that instead of taking true accountability of the situation, lenders would rather stick a device in the cars they finance to ensure a payment than to rethink all the time vested into sub-prime borrowers that simply won’t comply with a simple loan agreement.

    Borrowers that go more than 20 days past due should get their vehicles shut off, unless they have made prior arrangements with the lender. [With a warning at 10 and 15 days past due, along with a certified letter]

    I’m sure after the first twenty times a habitual late payer gets his/her vehicle shut off, they will get the idea:

    KILL THAT BLACK BOX!

    As a person of “less than perfect credit” stature, I would be terrified if the only financing I could muster up would be that from a lender that uses these devices to ensure a timely payment. I shouldn’t be made to feel like a criminal with an ankle bracelet that forces me to remain within a designated area.

    If a borrower can’t remain in a designated financial area on their own, they shouldn’t be able to obtain financing. Simple as that. I’ve had to prove my ability to repay with well over a year of solid, on-time payments and the paying off of several past due accounts.

    I get really peeved when a guy off the street with worse credit than me gets a loan and a great car, then never pays. They screw me over just as much as they screw over those with good credit. Don’t let people like that borrow freely – make them earn their approval like I had to.

  119. tmlfan81 says:

    @Orv:

    The device is merely a band-aid on the situation.

  120. Pithlit says:

    @Orv: But, see, they would. You’re wrong. They already did give loans to these people without them. This is just a way to shore up their end of the bargain to make it less riskier for them.

    These people aren’t necessarily making a rational decision. There’s often a reason they’re in the risk category they’re in. Many are in that category because they aren’t financially savvy. And it absolutely is unethical to take advantage of that lack of savvy. It isn’t disrespecting anyone’s choices by acknowledging this. Regardless for the reason they got into that risk category, it is wrong to take advantage of those circumstances and back them into a corner to get them to agree to terms they should have never had to agree to. It’s why usery is, or used to be, illegal. There’s no disrespect in that at all.

  121. ukthom says:

    @aaron8301: I thought that was the code for Nintendo’s Mike Tyson Knock Out…

    I’ve been wrong before…

  122. CyberSkull says:

    And suppose you need to drive to the post office to drop the payment in the mail or over to the lender’s office to make the payment?

    Who pays to install the device? To remove it? Will it void your auto warranty or service contract?

  123. RvLeshrac says:

    @chrylis:

    Except that paying the entire balance of a new car at purchase gets you placed on a federal anti-terrorist watch list.

  124. RvLeshrac says:

    @CyberSkull:

    Logically, it can’t/won’t void your warranty. The lender isn’t going to place a device on the car that further devalues the car, because then they’re shooting themselves in the foot in case of a default.

  125. RvLeshrac says:

    @Orv:

    Annual fees for credit cards are still a common occurence. The only reason they’re not mandatory is because most people would refuse the cards.

    That’s one of those cases where, you know, people spoke up *BEFORE* the policy was implemented.

  126. CyberSkull says:

    @RvLeshrac: Who says logic applies at the point where your lender wants to put a killswitch in your car?

  127. Dashrashi says:

    @Pithlit: You’re seriously my favorite poster.