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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."
I'm glad the finance companies found a way to make "be late on your payment, while you scrounge up money" a worse option for the poor than "let your family starve while you scrounge up money". :-/
>> turning off a car in a bad neighborhood
In other words, where they live?
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What makes a single male any safer in a dangerous neighborhood?
No it isn't. We made a relatively early decision in this country that debt slavery isn't acceptable, nor are debtors' prisons. We also decided you don't necessarily have full rights to your own money when you have an outstanding financial obligation, and that your wages can be legally garnished.
But we also have legal protections to insure that punitive and fiduciary measures don't create undue hardship. We have a pretty good system that does alright at balancing the risk-mitigating concerns of the creditor with the basic needs of the debtor, but in no way is failure to pay a debt actually illegal.
That fact doesn't even remotely justification the mindless advocation for it that the GP has. We don't need to have any Shylocks(and no, I'm not trying invoke the fact that he's Jewish) coming along for their pounds of flesh.
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Yeah poor people, suck it up and call an ambulance. It's only a couple extra grand tacked on to your hospital bill anyway.
Wait, you mean this whole situation BEGAN with financial problems, and this would only compound the issue? Oh, I guess it isn't so easy as "call an ambulance" and "don't be a stereotype."
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."
Either we're striving for equality in which females aren't protected by males or we're not. Please stop letting women play helpless victims while at the same time demanding preferential treatment for tons of other things. Equality kills all modern chivalry.
In the absence of a government-protected monopoly, if all sellers' costs decrease, competition will drive the price down over time. Ideally this is as true of automobile finance as it is of any other good or service. Or to which monopoly are you referring?
Debt slavery is perfectly legal in the US as long as you call it 'alimony'.
Jesus was all right but his disciples were thick and ordinary. -John Lennon
>>>People who got NINJA loans were a prime reason for the mortgage crisis.
Not quite. People who gave out NINJA loans to people who had no hope of repaying these loans and then proceeding to misrepresent these loans as AAA were the prime reason for the crisis.
I wonder if it moved a lot of cars from "able to repo and sell again to someone else" to "remotely shut down and then reported stolen and torched in a shitty neighborhood."
Buy a piggybank for $1
Put $389 in the first month
Set aside $389 in the second month
Break piggy bank
Combine two sums
Buy 8-year old car
How is that for a payment plan?
Being poor can be a real juggling act.
You probably don't have enough liquid assets to pay cash for a big-ticket item, but you can scrape by lots of "easy payments", even those the interest rates may be ruinous. You may, in fact, spend considerable time and effort on juggling bills because you can't pay them all, you simply rotate who gets stiffed that month. And then pay again because there will be penalties and late fees.
Being poor involves a completely different mindset. You can't afford to trade convenience for money because you have no money. You become timid because so many of life's problems can be smoothed out or solved if you have money, but you don't have money. So you take extra care to try and not have those problems.
And, of course, you buy a pair of carboard-soled boots every 6 months because you cannot afford to just up and buy leather-soled boots that will last 6 years, even though in the long run it's cheaper. Because everything has to be done in the short run.
It's all very well to say "pay cash", but you have to have the cash to begin with. If you start out at zero and you have no excess income to save, you're not going to have the cash. If your reserves are low and Tiny Tim breaks a leg, there go all the savings.
Then again, we all know that if they'd just work hard, they would all be billionaires, just like us hard-working folks. Who gives a crap about stupid lazy poor people?