If your car fails to start this coming winter, the problem may not be the battery – it could be a missed car payment instead. According to the New York Times, an increasing number of subprime car loan providers are requiring the installation of GPS tracking beacons and starter interrupt devices in the vehicles they finance. If an owner of one of these vehicles misses a payment, the lender can remotely disable the vehicle, making it undrivable until the loan is once again current.
For lenders, the new technology is a massive boon. PassTime, a Colorado company that manufactures remote disabling devices, say installations have reduced the rate of late car payments to 7%, down from a high of 29%. This has enabled lenders to be able to offer more car loans, often at extraordinarily high interest rates, to people who may have been turned down for them in the past.
Theoretically, this increased access to credit is good for borrowers. In practice, however, remote disabling has proven a nightmare for many. Lenders are not supposed to disable cars unless payments are more than 30 days delinquent, though some customers have reported having their vehicles locked down after only a few days. Others report missing important doctor appointments, an inability to pick up kids and being stranded on the side of the road in unfamiliar neighborhoods.
Even those who are current on payments report difficulty dealing with their newly empowered lenders. Many have had vehicles disabled improperly, some maliciously so. Earlier this year, a Texas man who worked for a car dealership was charged with a felony for using a remote disabling systems to “prank” drivers.
Further, the GPS trackers can be used to create geofences which prohibit vehicles from being taken out of certain areas – say, more than 20 miles from home or work. This can create severe safety issues. One Austin, Texas woman had her car disabled while she was on her way to a shelter to escape her abusive husband. There are big privacy issues too. Some lenders are monitoring if and when vehicles are parked at a work location as a type of “early warning system” for unemployment and missed payments.