Abusive Auto Loans – It Used to Take a Repo Man
In life after bankruptcy, some of my clients have an immediate need to purchase a used vehicle. The wise consumer will avoid a new species of car loan.
Subprime auto loans are often defined as loans to borrowers whose credit scores are under 640. These loans have now been linked to new type of repossession gadget. Beware the contract that requires that your vehicle be outfitted with a starter interrupt device.
Lenders can remotely trigger the device which disables the ignition. Once triggered the car cannot be driven without the gadget being reset by the lender. The devices also contain GPS technology which allows the car’s location and movements to be tracked.
Borrowers must stay current with their payments or else the lender can remotely interfere with their ability to drive their automobile. An agent from Covington, Louisiana, a suburb of New Orleans, says that he first contacts a delinquent borrower by telephone or in person and that they have to be at least 30 days behind before he will trigger the device. But judging from consumer complaints other lenders are not so considerate. There are reports of borrowers ending up stranded in bad neighborhoods or while taking a family member to a doctor.
State regulators are looking into the legality of these devices. Meanwhile, it is estimated up to 25% of new subprime loans use these devices. My advice is to stay away from them.
Click here to read more about starter interrupt devices from the New York Times.