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The Almighty Buck Transportation Technology

Miss a Payment? Your Car Stops Running 907 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."
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Miss a Payment? Your Car Stops Running

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  • Oh good (Score:5, Insightful)

    by i kan reed ( 749298 ) on Thursday September 25, 2014 @12:22PM (#47994287) Homepage Journal

    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". :-/

    • If they employ these methods, their risk should reduce significantly, as well as repo costs, and therefore be reflected in nice big loan rate drops. OTOH, if it enables a person who otherwise would not qualify for a loan to get one, it could be argued as a 'good thing'. I personally shudder at this level of what feels invasive.
      • Re:Oh good (Score:5, Insightful)

        by Jhon ( 241832 ) on Thursday September 25, 2014 @12:32PM (#47994439) Homepage Journal

        Lucky for them. All that money they save will help fight the lawsuits they'll have for accidents on freeways and intersections...

        • Re:Oh good (Score:5, Insightful)

          by LordLimecat ( 1103839 ) on Thursday September 25, 2014 @04:23PM (#47997267)

          I cant believe the degree to which blame shifting is happening in this thread. How about you meet your financial obligations, or dont take out loans you cant afford?

          When you park illegally and they boot your car, do you then complain that you werent able to pick up your sick diabetic daughter from chemotherapy? Or do you have a moment of introspection and ask, "how did I screw up in this situation, and how can I do better?"

      • Re:Oh good (Score:5, Insightful)

        by i kan reed ( 749298 ) on Thursday September 25, 2014 @12:34PM (#47994459) Homepage Journal

        Except that some percentage of that increased value is going to pay for the devices being installed, and their management. And what they're changing, according to the summary is late payments, not non-payments. Meaning the amount of risk mitigation is on the order of a fraction of a percent.

        Besides, that decrease in cost does little to handle the situation I described above. It only works if you buy into the neo-liberal notion that more liquidity in an economy always benefits all actors of that economy. I don't.

        • by Rei ( 128717 )

          Ignoring how easy a device should be to disable. Even if it's not simple to physically disconnect the device for some reason, imagine how easy it'd be to clip the antenna or shield it whatnot. No signal, no disabling. What are they going to do, send a repo man after the car? Well, then the device was useless because that's what they'd have done anyway.

          Plus, given that I bet a lot of people with such devices live in bad neighborhoods, I bet there's no shortage of people in the area who could offer hotwiring

          • Re:Oh good (Score:5, Informative)

            by Neon Spiral Injector ( 21234 ) on Thursday September 25, 2014 @01:10PM (#47994905)

            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.

            • Re:Oh good (Score:5, Insightful)

              by UnknowingFool ( 672806 ) on Thursday September 25, 2014 @01:21PM (#47995059)
              If I was him, I would have billed the loan company for the time he was not driving. After all is fair, right?
            • Re:Oh good (Score:4, Informative)

              by nabsltd ( 1313397 ) on Thursday September 25, 2014 @03:06PM (#47996365)

              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.

              I think a DDoS by anonymous on the servers that send the ping is in the works some time in the future. That would result in literally millions of cars (based on the percentages in TFA) being disabled.

              I can understand a "kill switch" as a tool to encourage on-time payments, but not a dead-man's switch. With that sort of design, just about any problem with any part of the system would result in cars that won't run.

          • Re:Oh good (Score:5, Insightful)

            by TWX ( 665546 ) on Thursday September 25, 2014 @01:43PM (#47995355)
            We visited a friend last night that is trying to sell a vehicle that's been sitting awhile. The battery is dead and a potential buyer made outlandish claims for what could be wrong with the vehicle in order to try to lowball her. All that would have been necessary to avoid that fiasco was to replace the battery, air-up the tires, and check the fluid levels and top-off as needed, then drive it around a bit to verify that it's still good to go.

            I could probably remove or bypass this anti-nonpayment disabler device in the same way that one could disable a breathalyzer or antitheft starter disabler device, but I don't think that most people could. What they need to do is to define rules for how long a grace-period post-payment-due should be, then make the device in the car itself notify the users through audio playback that they are past-due and have x days or x starts left before the vehicle shuts down until payment is received. That would satisfy a moral obligation to not leave someone stranded without notice, and would also prompt people to make their car payments if it's slipped their mind.
        • Re:Oh good (Score:5, Insightful)

          by mrchaotica ( 681592 ) * on Thursday September 25, 2014 @01:15PM (#47994973)

          Except that some percentage of that increased value is going to pay for the devices being installed, and their management.

          That's not as big a cost as you think. You see, these kinds of car dealers that specialize in bad-credit buyers expect to repossess the cars eventually. They don't make their money from buying a car and selling it once at a higher price; they make their money from selling, repossessing, and re-selling the same car over and over again, while collecting usurious interest payments in the intervals between sale and repossession. All these devices do is make the cycle more efficient (and thus more profitable) by shortening the time between the first non-payment and the repossession.

          • Re:Oh good (Score:4, Interesting)

            by hawk ( 1151 ) <> on Thursday September 25, 2014 @06:30PM (#47998277) Journal

            And even you are understating the matter.

            I once represented the general manager of the biggest one of those in town on another matter.

            Breakeven is on sale: the down payment is set to what they paid at auction. They sell, collect a few payments, repo, sell again . . .

            Their idea of a good car is one they get to sell 3 or 4 times.

            hawk, esq.

      • Re:Oh good (Score:5, Insightful)

        by Demonantis ( 1340557 ) on Thursday September 25, 2014 @12:41PM (#47994557)
        It is not a good thing for predatory loans to exist. These people can't afford the way they are living. They need to rejigger their lives. The loans just prolong the agony and inflate prices for everyone by creating demand and buying power where demand and buying power should not exist.
        • Re:Oh good (Score:5, Insightful)

          by Wycliffe ( 116160 ) on Thursday September 25, 2014 @01:01PM (#47994817) Homepage

          How do you define predatory? Let's say I lose my job and burn thru my savings and then my car breaks down.
          I'm late on my mortgage and have maxed out my credit card. Yes, I did it mostly to myself, but now let's say
          I do manage to find a job and don't live in a big city and need to get to work. I'm too risky for someone to give
          me a loan but with one of these devices someone who otherwise would not sell me a car might be willing to
          take that risk. Is this a predator because they are selling me a car when noone else will?
          Same with payday cash loan places. They are willing to loan money to people when banks won't. In exchange
          they charge considerably higher interest rates but still probably better than getting a loan from a loan shark
          that gets you to pay him back with a baseball bat. Desparate people do desparate things. You can't eliminate
          predatory loans without eliminating desparate people. It's much better to regulate it than outlaw it and sometimes
          even people who aren't living incorrectly come up short of money when they need it most.

          • Pay cash (Score:4, Interesting)

            by aclarke ( 307017 ) < minus threevowels> on Thursday September 25, 2014 @02:03PM (#47995601) Homepage
            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".
            • by amiga3D ( 567632 )

              I bought a car for $1100 when I got out of the Air Force back in 1988. It was a 1980 Malibu with a V6 engine that got a solid 20MPG and looked fair but drove good. 14 years later I sold it to a scrap yard for $300. I'm now driving a 2001 Grand Marquis I bought in 2005 for $10,000 cash and it should last another 5-10 years. I've bought one new car in my life and I'll never take that fucking again. It was nice but a year later it was a used car with 20K on it and a big car payment, big annual taxes and m

            • Re:Pay cash (Score:5, Insightful)

              by RabidReindeer ( 2625839 ) on Thursday September 25, 2014 @02:53PM (#47996197)

              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?

        • Re:Oh good (Score:4, Insightful)

          by Moof123 ( 1292134 ) on Thursday September 25, 2014 @01:05PM (#47994865)

          Payday loans are a scurge on the earth. If you have to resort to one you are already financially toast, and all they do is suck you into a final debt black hole that is nearly impossible to escape.

          The need to install an ignition interrupter makes it clear that these loans should not have been made in the first place, and put htese loans into the same category as payday loans. The practice should not be legal, and these customers should simply not qualify for these vehicles in the first place.

          There are plenty of ways to rant on the financial misery that is fairly common in our country. We have a weak safety net, basic home accounting/budgeting is either not taught or poorly taught, wages are stagnant, living and working in the USA without a car is a poor option in nearly all parts of the country, etc. These loans and associated practices are just one more symptom of a broad set of problems we have in this country.

          • Except that these devices make it possible to lend somebody money for a used car who otherwise wouldn't get a car. Whether the loan is good depends on things in the future, and whether the loan will be made depends on things in the past. If somebody gets a job and needs a car to commute, this sort of loan makes it possible for the guy to slowly get into a better situation.

          • Re:Oh good (Score:4, Insightful)

            by TsuruchiBrian ( 2731979 ) on Thursday September 25, 2014 @02:16PM (#47995745)

            Payday loans are a scurge on the earth. If you have to resort to one you are already financially toast, and all they do is suck you into a final debt black hole that is nearly impossible to escape.

            Well if you are already "financially toast", then it's pretty easy to escape. Just stop paying back your loans. Your credit score will be ruined, and no one will ever lend you money again. So what? That's where we started and where you wanted to end up anyway.

            We don't have a debtor's prison in the USA. The worst punishment you will get for not having money, is that people will stop giving you money. There are even limits on how much your wages can be garnished.

      • Re:Oh good (Score:5, Interesting)

        by danheskett ( 178529 ) <danheskett@gm[ ].com ['ail' in gap]> on Thursday September 25, 2014 @12:44PM (#47994605)

        The cases presented are really disturbing. Lenders lending money on fully depreciated cars are not taking a big risk. Lending money on a new car is taking a big risk because if there is a default, the cost of recovery, plus liqudation, means the lender will have to pursue the borrower for a large deficit that is now unsecured. Guy driving off the lot with a brand new car with a $2500 downpayment is upside down on that 5 or 6 year car loan for at least two years, maybe more, depending on the rate,

        If you drive off the lot with a loan for a car that is fully depreciated already, and you paid an appropriate amount for the car, even without a down payment, the lender has a relatively small amount of risk.

        The fact that these devices exist and are popular suggest that the lending process is broken somewhere. It could well be with valuations. If the vehicles are being overvalued, or loans are being written for more than 100% LTV, it would explain this.

        • Car loans are the new house loan. A Car Loan Company with a means of dealing with repossession would end up looking at the value proposition you describe. But they want to bundle and sell car loans these days. The buyer of the loan (on a depreciated car) could not really be said to be at low risk because they're not really prepared to do anything should you miss a payment. But a nearly automated lender response to late / non-payment makes these loans more sale-able.

          Missed payment remote kill options are

        • Re:Oh good (Score:5, Insightful)

          by zarthrag ( 650912 ) on Thursday September 25, 2014 @03:13PM (#47996439)

          If you drive off the lot with a loan for a car that is fully depreciated already, and you paid an appropriate amount for the car, even without a down payment, the lender has a relatively small amount of risk.

          That's the kicker, right there. These customers do not, nor will they ever, have $2500 for a down payment (If they did, they could buy a "real" car.) These places take vehicles with a bluebook value of $2000-$5000 and sell them for $10,000 or more with little to nothing "down", at the maximum interest rate the law will allow, and with an "as-is" warranty term.

          It's usury, plain and simple. These snakes are just waiting for you to slip-up on a payment. Fees for being late are fair. But their goal is to simply repo the very moment you're late with a payment. Because, then, they can repo the car - sell it again (and again, until it can't be sold). Auction it. Then still leave you with a credit-report item for the difference.

          A remote kill-switch (and probably GPS for recovery) only increases profits, I'm sure.

          Believe it or not, but 95% of 'Merica isn't New York/Chicago/LA/Big-City. Here in Tulsa, there is no public transit to speak of. Unless you plan carefully where you live/work, it's quite difficult - maybe impossible - to live/work/eat without constant access to a car.

          Profits over people. It's the American way.

    • Re:Oh good (Score:5, Insightful)

      by Penguinisto ( 415985 ) on Thursday September 25, 2014 @12:45PM (#47994625) Journal

      ...and this is why I have never made a car payment since the early 1990's, when I got a car repo'd while I was off serving in Desert Storm (once I pointed out that the bank broke the law by doing the repo, I discovered the costs of bringing the car back across two states --or a lawyer to fight that-- was way out of scope for an E-4 sergeant's budget.) It was then that I resolved to never, ever make payments on a car again... ever.

      Since then, I've driven some outright piles of crap throughout the 1990s, but I've always owned my cars free and clear. I save up the money as best I can until I have enough to buy something newer in reasonably decent condition.

      This has progressed from $300-400 hoopties, to a 1988 Mustang (in 1999) for $400, to a 1991 Jeep Wrangler (in 2001) for $4500, to a 2003 Pontiac Sunfire (in 2007) for $7200, to a brand-new 2013 Kia Soul for $14,200.

      Each time, I saved my pennies and paid cash, which gave me a drastically lower pricetag, and I own the thing up-front. As a bennie, I still have both the Sunfire and the Soul (my wife drives the latter, and the former is still rolling along just fine at 150k miles), and the Soul is fully covered under warranty for the next 8 years. The Jeep finally died for good in 2013 (too much rust decayed the frame), prompting the new Kia. I gained the advantage of being very handy around a vehicle with tools and knowing junkyards very well, though most of that was self-taught over the years from turning outright shit-piles into decent running cars.

      Long story short? Yeah it sucks that you can't drive some NewShiny that gathers all the babes, but start small and build up over time. Save, save, save... and always pay cash. You wind up paying less over the long run, the salesman suddenly wants to kiss your ass, and you get a better deal overall.

      Oh, and in many of the cases up there, I managed to sell the older cars for more than I paid for them (though nowadays I figure I'll just drive the ones I have until they finally die for good.)

      • Please tell me that was a typo. E-4 is either Corporal or Specialist.
      • by jfengel ( 409917 )

        I applaud your approach, but I did want to point out that a good $300 car is difficult to find (not to mention that $300 in the 1990s is about $600 today, after inflation, and minimum wage hasn't risen to match). A car in that price range is often going to be unreliable, and a single repair on something significant (transmission, engine, etc) is going to cost as much as the car. Even a new set of tires can be a significant cost burden.

        If you're capable of doing your own maintenance, that can bring costs dow

  • >> turning off a car in a bad neighborhood

    In other words, where they live?

  • Could be improved (Score:4, Interesting)

    by RobinH ( 124750 ) on Thursday September 25, 2014 @12:27PM (#47994333) Homepage
    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.
    • by msauve ( 701917 )
      FTA:"Some of the devices beep at customers just before payments are due, and whistle when theyâ(TM)re a day away from being shut off."

      And, they're starter interlocks, they won't disable a car while it's running, despite what the lady who ran out of gas said.
    • Maybe they could make it in the form of a green LED armband so you can always tell how much more car time you have!

  • It's not your car until you pay for it. Until then, it's the bank's car.
    I question why a single mom with no job has a $389 monthly payment instead of buying a 8 year old used car she could actually afford.

    • by mrchaotica ( 681592 ) * on Thursday September 25, 2014 @12:42PM (#47994581)

      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:

      1. "Sell" car to bad-credit buyer at an inflated price (because such buyers have no bargaining power), financed with a huge interest rate.
      2. Collect mostly-interest payments (and remember, interest on a balance inflated thousands of dollars higher than what the car should have cost) for however long the buyer can scrounge up the money.
      3. When the buyer defaults, repossess.
      4. "Sell" the same car again to the next sucker, rinse, and repeat.

      (* 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.)

  • by Anonymous Coward on Thursday September 25, 2014 @12:29PM (#47994387)

    What makes a single male any safer in a dangerous neighborhood?

    • by MightyYar ( 622222 ) on Thursday September 25, 2014 @12:34PM (#47994465)

      They'll rob you, but they probably won't rape you.

    • On average, less physical strength and higher desirability as a rape target than a single male.

      Shall I also explain to you why fire can be bad, and why eating is generally important?

  • by aprentic ( 1832 ) on Thursday September 25, 2014 @12:32PM (#47994431) Homepage

    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.

    • by swb ( 14022 ) on Thursday September 25, 2014 @01:16PM (#47994985)

      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."

    • Subprime autolending can be vastly profitable, and basically, anyone who has a job and can pay a reliable payment can finance a car. Just not cheaply. There is essentially no demographic of people who can afford a car who doesn't have access to some form of auto financing. This does is allow financial institutions to get into the very sub-prime lending market. Previously, banks and credit unions would only go so far down the lending later. However, the profit incentive is too strong to resist. Look at

  • by mlts ( 1038732 ) on Thursday September 25, 2014 @12:35PM (#47994477)

    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.

  • end the market (Score:5, Interesting)

    by nimbius ( 983462 ) on Thursday September 25, 2014 @01:00PM (#47994805) Homepage

    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

    • by silfen ( 3720385 )

      to include more acceptance of a post-consumer capitalism that no longer expands inexorably

      If you're happy with a "post-consumer capitalism that no longer expands inexorably", why are you concerned about stagnating wages for everybody but "the one percent"? Seems to me the latter automatically leads to the former, and you can save yourself all that moral outrage and be happy that you got what you wanted.

  • by ZombieBraintrust ( 1685608 ) on Thursday September 25, 2014 @02:07PM (#47995651)
    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.

The opossum is a very sophisticated animal. It doesn't even get up until 5 or 6 PM.