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!)
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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.
@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." :)
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.
@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.
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.
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.
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.
@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.
@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?
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.
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.
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.
@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!
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.
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.
@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.
@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.
@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.
@aaron8301: the "select" and "start" were never part of the code. That part just starts the game and switches player count.
@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".
@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


























Is this for everyone or just ones with bad credit.