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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". :-/
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What makes a single male any safer in a dangerous neighborhood?
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.
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."
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?
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Or they could make it a crystal that gets implanted in poor people's hands that could change color based on their payment standing, from white to yellow to green to red and then flashing red on Lastday.
Fox: "I think we should call it... your grave!" Cast: "Curse your sudden but inevitable betrayal!"
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
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.
>>>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.
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.
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.
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?