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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". :-/
There should be a visible counter. "Vehicle payment overdue. Ignition will be disabled in 72 hours 00 minutes..." That would solve most of these problems and make it fair.
"I have never let my schooling interfere with my education." - Mark Twain
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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.
It would be interesting to see what the net effect of these devices is.
Did it just move a bunch of people from the category of "You can have a car loan and if you don't pay we will go through a long process to repossess your car." to "You can have a car loan but we can shut it off as soon as you miss a payment."
Or did it move people from the category of "You don't get a car loan at all." to "You can have a car loan but we can shut it off as soon as you miss a payment."
I suspect it's both but it would be interesting to know what happens in aggregate.
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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.
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."
Typical capitalist stunt. I have a better idea. Don't lend to people with crap credit to begin with. People who got NINJA loans were a prime reason for the mortgage crisis. Have we learned nothing? People with crap or no credit need to be buying older, used cars until they can either build credit or make better income. Nowhere is it written people deserve nice, new, shiny cars. Everytime I see someone hurtling down the street in a brand new shiny car or truck I think they are likely up to their eyeballs in debt. My wife and I have said we will never, ever again buy a new car. It's not worh the aggro.
I am envious, thought, of those with the rock-solid Volvo 240D I see often in my area. I would love one of those. They run literally forever.
There's a difference between holding the title, and holding a lien on that title. The driver owns the car, but at the same time, the car is security for the lienholder, who can repossess it (take title) if the buyer defaults on the loan.
"National Security is the chief cause of national insecurity." - Celine's First Law
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?
It probably is an 8 year old car. The monthly payment is so high because A) the buyer paid a hugely inflated price, B) it's probably got an incredibly high interest rate, and C) it might even have leftover debt from the previous car (that probably also got repossessed*) rolled in.
Remember, places that prey^W specialize on bad-credit buyers are not really car dealers; they're loan sharks that incidentally let you borrow a car. Here's their business model:
(* Is it possible to still owe money on a car after it's been repossessed? I don't know, but it's certainly possible to claim to a bad-credit car buyer that they do.)
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
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Strange. I've owned a car (several of them, actually) for a couple of decades and I never made a payment other than the first one I used to buy the car. I've also never paid over $3000 for a car. Something about learning to maintain it yourself and not having much money. Also something about how true ownership beats the pants off someone else having control of my stuff.
Guess as you get paid more, you gather this strange belief that everyone does the same crazy dumb shit that you're doing.
Cars are cash items due to severe depreciation and high maintenance costs. Can't afford to buy it cash? Don't. If you have under $1000 cash (the minimum I find drivable cars selling for) the last thing you need are payments! And if you need it for a job, make sure you pay the car off within a month or two (there's plenty of $2000 jalopies you can pick up at the various fleece-me-blind no-credit car lots that should be priced at $1000 cash).
If you buy a used car, it will run into problems. If you go to a mechanic with even the smallest of problems, they will quote you $500. If you ignore the problem, it will get worse and worse until it is unsafe to drive or the car simply doesn't start at all.
Learning to maintain a car isn't that hard but you can't do it on your apartment parking lot.
This isn't 25 years ago. I just got rid of my 12 year old car that had a blue book value of ~$1000. It wasn't the prettiest thing, the trunk latch needed a bit of fiddling to get to open as the spring in the external latch handle was worn out, it leaked oil (slowly, about a liter per month) and it had a few other minor issues with it, and someone had backed into the driver's side door in a parking lot, leaving a dent about the size of a dinner plate. I traded it in, but if I sold it privately I realistically would have gotten about $700-$800 for it on the open market based on comparables for sale in the paper and on Craigslist at the time.
The reason I got rid of it wasn't that it was unsafe or it wouldn't start or run, it was that to bring it back to 100% would cost a couple of thousand dollars that I figured would be better spent getting something newer and fancier that I can afford to do. It was still mechanically sound aside from the small oil leak and pretty much the most dependable car I've ever owned. If selling it privately wasn't such a hassle, I would have been happy to see it go to some college student or other person who needed good basic transportation for not too much money.
There are lots of cars in the $1000-$2000 range these days that are sound and dependable, their only sins are that they are old and cosmetically challenged.
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
You are wrong. You may know whether you have paid or not, but the little computer telling your car not to start doesn't. There is a used car dealership in the Houston area well known for having these installed on their cars. They apparently have a high frequency of false positives. They always attribute it to problems with their database, but I suspect they just have lazy people doing their accounting.
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,
the rise of --and lets call it what it is, predatory lending -- in the auto industry is due to a number of factors. Auto purchases from first time buyers, millennials, are down by 30% and a number of millenials by age 18 simply never applied for a drivers license. The bump from cash-for-klunkers, while nice, hasnt been able to produce sustained profit increases for dealers in light of more efficient, less failure prone cars that see service less often. congressional calls for austerity and government shutdowns have reduced consumer confidence after a crushing economic recession. And finally, with american wages at an alltime low and the wealth gap ever expanding, its hard to imagine many dealers can resist the allure of a sales model that results in a more expensive vehicle that nets a longer period of recurring revenue for lending agencies that are basically wings of the automotive brand (Honda Financial Services for example)
The problem is systemic. industry practices like this dont emerge until the dregs have been drained and the market is contracting due to uncontrollable economic greed. outlaw these business practices and reform business related legislation in general to include more acceptance of a post-consumer capitalism that no longer expands inexorably
Good people go to bed earlier.
Police and taxis don't come for people without any money.
Troll is not a replacement for I disagree.
That would be great, if the credit system worked.
Sadly people have no real defense against people lying about you and dinging your credit. Something that the collection industry is rife with. People just calling up and saying you didn't pay X bill, pay up. And when you say, yes I did pay X bill, here is the proof, they don't care and ding your credit.
The tech bust was very hard on my assets, in fact it wiped them out, and then we had medical issues. That was 13 years ago.
I had a really nice awaking t the amount of abuse and fraud the collection industry has and how they specifically target people between 590 and 640 credit range.
Did you know that when you look into getting are finance mortgage, your credit can take up to a 13 point hit? Just for trying to get a rate, not for actually getting a lone?
That really surprised me. Why? because during the 90's I wrote software for a credit agency. My software was used to determine scores. At that time it was 1 point, soft hit, gone in 8 weeks.
The fact that yo can take any hit to your credit for shopping for a good loan is stupid and, frankly, mean.
The Kruger Dunning explains most post on
Learn when and where your money can be used to work for you and live within your means. This is simple advice that is apparently pretty hard to follow. It's also the only one-size-fits-all statement on that subject that I'd be comfortable making.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
If it was supermarkets ...
On the other hand if its a rented property there all kinds of protections in place to prevent the landlord from tossing you out on the street the minute your late on a payment.
Maybe we should be protecting the car owners. After all, in the event of a car loan -- the title of the car actually belongs to the person. The bank only has a lien against it, not title to it.
Things get a bit murky as the loan was given 'on-condition that' the disabler be in place. But perhaps the term is unconscionable and should be made illegal.
After all, again, tenants agreements are strictly regulated and there is all kinds of stuff a landlord cannot legally put into a rental agreement.
Maybe vehicles should be afford the same consumer protections, given how integral they are to people's livlihoods, and how peoples safety is compromised if the car is shutdown remotely.
And frankly your supermarket argument fails the sniff test. The transactions are of a completely different nature. Nobody here is objecting to the car dealer refusing to sell someone a car who can't afford it. They are objecting to the dealer taking a risk by financing the car and then mitigating that risk using means of dubious ... acceptability.
While I'm not saying we should take the word of the lenders without verification, neither should we take the word of the people who are on the receiving end. They may very well not be telling the whole story. Some people who have financial troubles have them because of their own choices, but they rarely admit it.
I had a roommate like that. He was an alcoholic who wouldn't admit it or deal with it. He continually made bad choices in his life, but would never admit anything was his fault. In terms of finance he never paid things when they came due, he didn't pay until he was forced to. It was "due" according to him when they were about to shut off his service, or the like. So he'd get mad about his cellphone getting shut down when he was "a day late" by which he really mean "45 days past the due date, over 30 days late, and had 2 threatening letters to disconnect."
So before you go jumping to the defense of the people in the article, you might want to see what the terms of something like this is. I don't know, and I'm not saying it isn't a "you have to pay by the second it is due or we shut it off," but it also might well be a normal "It is due on day X, late on day X+15, and we shut it off on day X+20," and the people involved have just decided that "X+20" is the day it is "due".
With regards to #2, where in the US if you call 911 do you not get an ambulance? They are not taxpayer funded, but they are required to take ALL calls. If there's a medical emergency, you'll get transport and treatment, even if you lack the means to pay. That is part of the problem with high healthcare costs (the costs of people who don't pay get rolled in to the people who do) and an excellent argument for universal healthcare at least for emergency treatment.
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Forced competition between even a handful of carriers - long considered oligopolistic - is driving down cell phone pricing plans considerably.
The USA has some of the highest cell phone costs in the developed world.
Let me rephrase: The cellular market in the United States is not yet at equilibrium. Competition is causing prices to become less "highest" over time and to gradually approach the more efficient price seen in other countries.
I thought the legal tender law required a creditor to accept cash as a repayment of debt. So take the loan and pay it off before any interest accrues.
It doesn't say that they need to let you pay back the loan early. If your contract says $500 over 60 months, they have to accept $500 cash every month for the next 60 months and can't demand you pay buy cheque or using a card, but they don't have to accept the full amount in cash at once.
Why not just pay cash for the car? I'll generalize and say that if you're paying car loans, you're doing it wrong.
There are edge cases, but pretty much anyone who can afford to qualify for a $250/month car loan can afford to find $500 to buy some junker that will probably last 3 months. After 3 months they'll be ahead $250. Again i'm generalizing, but my point remains.
For most people, most of the time, sucking it up and buying a cheap old car for cash will be cheaper for them than buying a car they can't afford. I define affording a car by "have the cash to pay for it", rather than by the seemingly more common definition of "could get a loan for it".
www.clarke.ca
I don't know how I feel abou this. If you don't put gass in your car it will also stop. Not putting gass in your car could result in you being stuck in traffic or stalled in a bad neighborhood. These people know their cars are going to stop. They are just trying to push the system and see how long they can drive before they lose the car. As long as it is 100% predictable that the car will stop starting after a given period then I am fine with this.
A credit card that you pay off each month costs you nothing (if you do this you can get any annual fee removed), gives you a one-month+ float, and builds your credit rating. Provided you have the discipline to do this, it's not just for emergencies.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
What you do see are articles complaining when supermarkets that throw out food at the end of the day, and say, shoo away hungry homeless people from taking it. Or a regulation in New York City that prohibits a restaurant from donating day-old bagels or soup to a food pantry like they used to. Or mortgage-wracked homes standing empty for long periods of time when homeless people roam the streets. These complaints do in fact get legitimate traction. And leaving a perfectly good car disabled in your driveway when you need to get to the hospital, or disabled in a bad part of town or cruising down the highway, when clearly no one else can make use of it, smacks of the same Scrooginess and bad-neighborliness.
We know where leadership by an anti-intellectual "strongman" who scapegoats minorities and likes boisterous rallies goes