Big Brother auto loans

Eye-Q

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Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years.
But before they can drive off the lot, many subprime borrowers like Ms. Bolender must have their car outfitted with a so-called starter interrupt device, which allows lenders to remotely disable the ignition.
It was not the only time this happened: Her car was shut down that March, once in April and again in June.
:dunno: If you loan something you can't afford and missed payments three times before that you're at fault - it's not that she didn't know what to expect...

That's the problem with loans: many people loan something they can't afford, I don't have any sympathy for that. If I can't afford something I don't buy/loan it, easy as this. It's not that you have no other choice: the used car market is big and you can get cheap, reliable cars, but people always want more and bigger.
 

chaos386

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Sounds like a tricky situation that could use some government oversight, but just for the safety concerns (so they can't shut off cars while they're being driven).

The privacy concerns are a little...muddier. In an sense, the car partially belongs to the lender, and that's what they're tracking. If hard times meant you had to borrow the car of a friend of a friend, but they told you it had a GPS tracker on it, could you blame them? They don't know you all that well, and he lost a car lending it out to someone before, so he has a right to be cautious, but on the other hand, now he knows everywhere you drive, and can do whatever he wants with that data. That can be very bad (as in the example of a woman driving away to escape an abusive husband), but your only other option is to not have a car (which isn't really an option in much of the US).

I hate the lead story in the article you linked, by the way. Lots of setup to pull our heartstrings, when the same result (mom unable to drive kid to the ER) would have happened if they repossessed her car the old-fashioned way.
 

GRtak

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:dunno: If you loan something you can't afford and missed payments three times before that you're at fault - it's not that she didn't know what to expect...

That's the problem with loans: many people loan something they can't afford, I don't have any sympathy for that. If I can't afford something I don't buy/loan it, easy as this. It's not that you have no other choice: the used car market is big and you can get cheap, reliable cars, but people always want more and bigger.

And what about the ones that claim they paid on time and still got shut off? And what about this violating the law that says the loan is not in default until 30 days past instead of the two or three that these all seem to be getting shut off at?
 

AiR

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A dodgy loan for dodgy people.
 

Eunos_Cosmo

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You'd think that we would have learned that sub-prime lending can lead to very bad things.
 

chaos386

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props to them for finding people stupid desperate enough to sign!
FTFY. A lot of times, it *is* because they're stupid and/or bad with money, but the US lacks a lot of the safety nets that other civilized nations have, so some of these people have just been hit with bad luck (medical bills are often a big issue).
 

LeVeL

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You don't wake up one day and find yourself on the sub-prime side of things. That usually takes years of bad decisions and big mistakes.

That said, the two day time frame is ridiculously low. Then again, I suppose if those were the terms you signed up for, then you can't complain.
 

British_Rover

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Yup people who weren't in the business in 2008 or 2009 have no idea what happened.

Auto lending virtually stopped unless you were 750 or 775 plus and putting down significant cash. Even then I had people with 800 credit scores denied because they wanted to finance the majority of the car, say just put down taxes and finance the rest, which in normal times was a regular deal.

Subprime lending has just now gotten back to about where it probably should be so that people with iffy credit can actually get a car without having to wipe out what little liquid reserves they have.

The remote car stop features are new, and not something I have any experience with, as that used to be the domain of larger buy here pay here lots. BHPH are even lower then subprime as many of those places don't even report to credit bureaus so the people that do make payments on time don't even improve their credit. If moving the remote car disable devices up a level on the credit playing field gets more people to make regular payments that is reported to the bureaus that is a good thing.

The problem is with places shutting down the car with a three day late payment, their should be a small grace period of more than three days, but they should also read their contract.

Another problem is regular car dealers becoming more like BHPH places by using this technology to roll a car multiple times with multiple large down payments.

This is the way that most BHPH places actually make their money. The down payment they require is forfeited if they take the car back so they might sell the same car several times and just keep taking it back from people.
 

AMDX1325

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This is the way that most BHPH places actually make their money. The down payment they require is forfeited if they take the car back so they might sell the same car several times and just keep taking it back from people.
Excuse my french, but that sounds very fucked up...
 

Spectre

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Excuse my french, but that sounds very fucked up...
It's legal and part of the terms of the loan contract that the parties are both supposed to read and agree to prior to the car changing hands. Think of it this way, the buyer agreed to make payments *on time* with little to no grace period and it's usually quite clearly laid out in the documentation so nobody can claim it was hidden. It isn't the seller's fault when the buyer doesn't pay on time and the seller lives up to their side of the contract by repossessing the car. All this box does is make it easier and cheaper to repo the car.

A lot of these places exist (and make money) because there's a lot of stupid people who don't read what they're signing. They default all on their own, so the dealer gets the car back and sells it out again. If the buyer actually lives up to their side of the contract, nothing bad happens.

There's a flip side to this - these boxes allow dealers to sell cars (and lenders to make loans) to people they wouldn't otherwise be able to take a chance on. It allows people who have decided to be responsible to rehabilitate their credit.
 
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Dr_Grip

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It allows people who have decided to be responsible to rehabilitate their credit.
No, responsible people in that kind of situation would drive a $1500 banger, not finance a car.
 

bone

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No, responsible people in that kind of situation would drive a $1500 banger, not finance a car.
this!
and the only thing that i ever will finance, is my house!
for everything else: if you don't have the cash, don't buy it!
 

TC

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this!
and the only thing that i ever will finance, is my house!
for everything else: if you don't have the cash, don't buy it!
Good luck financing a big purchase if you have a nonexistent credit history.
 

bone

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besides a house and maybe a car, what other big purchases (you can't do without) are there?
 

Dr_Grip

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Good luck financing a big purchase if you have a nonexistent credit history.
besides a house and maybe a car, what other big purchases (you can't do without) are there?
In the US, you basically pay everything with your credit card. And if you don't, it looks suspicious.
 
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