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Miss a Payment? Your Car Stops Running
HughPickens.com writes Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years with roughly 25 percent of all new auto loans made last year subprime, a volume of $145 billion in the first three months of this year. Now the NYT reports that 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. 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 and a leading device maker, PassTime of Littleton, Colo., says its technology has reduced late payments to roughly 7 percent from nearly 29 percent. "The devices are reshaping the dynamics of auto lending by making timely payments as vital to driving a car as gasoline."
Mary Bolender, who lives in Las Vegas, needed to get her daughter to an emergency room, but her 2005 Chrysler van would not start. Bolender was three days behind on her monthly car payment. Her lender 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. 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. Attorney Robert Swearingen says there's an old common law principle that a lender can't "breach the peace" in a repossession. That means they can't put a person in harm's way. To Swearingen, that would mean "turning off a car in a bad neighborhood, or for a single female at night."
Mary Bolender, who lives in Las Vegas, needed to get her daughter to an emergency room, but her 2005 Chrysler van would not start. Bolender was three days behind on her monthly car payment. Her lender 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. 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. Attorney Robert Swearingen says there's an old common law principle that a lender can't "breach the peace" in a repossession. That means they can't put a person in harm's way. To Swearingen, that would mean "turning off a car in a bad neighborhood, or for a single female at night."
This technology isn't new. An Austin car dealer a few years back had something similar where the buyer would pay weekly and punch a code on the receipt on a PINpad or else their car wouldn't start.
IIRC, A disgruntled ex-employee had a valid employee's password, logged on through that, and disabled all cars in the system out of malice, paid customers or not, having all their vehicle horns honk as well until the batteries died.
Not impressed with a system like this. Even after it is removed, the fact that it likely was installed by someone who just hacked and twisted wires at almost random may mean electrical issues down the line.
A friend of a friend has a car with one of these. It might be possible to bypass it, but blocking the signal isn't the solution. He parked his car in an underground garage, and when he came back it wouldn't start. Turns out if the disabler hasn't received a ping in a certain elapsed time it also disables the starter. He called the loan company, and they had to send a technician to get the car to start, and be able to drive out of the garage.
Because he read the summary.
You may not be rich, but you have clearly never been poor.
I, also, buy with cash, even (especially?) products as expensive as cars. But I have known many people for whom that was not an option. Not even on the used market. (I, personally, prefer to buy a car that's about three years old from a representative of the manufacturer. They often buy cars from people who are trading in on a new car. And they also want to keep the brand name in good repute.) But I've known many people who couldn't scrape together enough cash to purchase even an old used are.
Your question of "why people don't just get cheaper cars" is strictly analogous to Marie Antonette's "Let them eat cake." (though to understand this you do need to know that the cake referred to was dough that was caked to the sides of the baking oven during the baking process). For many people that is not an option. (There are, of course, the others. And, yes, foolish people exist. Just about everyon is in one area or another.)
I think we've pushed this "anyone can grow up to be president" thing too far.
http://dealbook.nytimes.com/20...
From the NYT:
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 doctorâ(TM)s appointments. One woman in Nevada said her car was shut down while she was driving on the freeway.
From the summary:
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.
HughPickens.com may not be able to write for crap, but he can plagiarize like a motherfucking champ.
Poor people don't have any savings. Money is always spent immediately. These are people who buy bus passes 7 days at a time, instead of 30 days, and pay rent on a weekly basis instead of a monthly basis. These are people who have to take out payday loans to pay their overdue electric bill, and only can pay the past due amount, never the full amount. These are the people who don't have bank accounts and pay check cashing fees, prepaid card fees, Western Union fees, money order fees, etc. They don't have 6 months worth of expenses saved up, but that's a lot of us. But these people don't even have one week worth of expenses saved up.