Missed Loan Payment? Your Car Might Not Start

What's Hot

Do This or Your iPhone Bill May SkyrocketSave

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

11 Places in the World Where You Can Afford to Retire in StyleMore

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

32 of the Highest-Paid American SpeakersMake

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

9 Tips to Ensure You’ll Have Enough to RetireFamily

5 DIY Ways to Make Your Car Smell GreatCars

30 Awesome Things to Do in RetirementCollege

5 Spots Where Retirees Can Live for Less Than $40,000Real Estate

10 Ways to Pull Together the Down Payment for a HomeCredit & Debt

10 Ways to Reduce Your Homeowner’s Insurance RatesFamily

50 Ways to Make a Fast $50 (or Lots More)Grow

Some subprime borrowers’ cars have tracking devices and remote kill switches.

Subprime auto loans are on the rise in the U.S. In fact, nearly 1 in 3 auto loans goes to borrowers with not-so-great credit. Many of those subprime borrowers have a little extra incentive to pay their car loan on time: If they miss a payment, their car won’t start.

According to The New York Times, starter interrupt devices are wired into the dashboards of many vehicles, allowing lenders to remotely disable the vehicle’s ignition if the borrower misses a car payment. The “payment assurance” devices are also equipped with GPS so lenders can track the cars’ location and movements.

“Now used in about one-quarter of subprime auto loans nationwide, the devices are reshaping the dynamics of auto lending by making timely payments as vital to driving a car as gasoline,” the Times said.

Nearly 2 million cars are outfitted with the remote kill switches. But the devices have had their fair share of problems. The Times said:

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.

Some lenders enable the devices after 30 days of nonpayment, while others wait just a few days after a missed car payment. Borrowers are supposed to be able to restart their car in case of an emergency, but the methods provided to do that don’t always work, the Times said.

Lenders that use the devices said they’re a measure to protect themselves from risky loans, and borrowers ultimately consent to them. According to CBS MoneyWatch:

The benefits of the devices, supporters argue, is that they allow some consumers to buy cars when they might not have qualified previously. According to the Wolters Kluwer white paper, customers are able to finance their purchases with smaller down payments, while more vehicles are being sold to people who wouldn’t have otherwise qualified for a loan.

Although the devices are legal across much of the country, borrowers’ privacy – and sometimes dignity – may be at stake. According to the Times:

“No middle-class person would ever be hounded for being a day late,” said Robert Swearingen, a lawyer with Legal Services of Eastern Missouri, in St. Louis. “But for poor people, there is a debt collector right there in the car with them.”

What do you think of the remote kill switch and tracking devices? Share your comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: How Come You Still Can’t Get a Home Loan?

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,675 more deals!