Tech Replaces Repo Man

Oct 2, 2014 by

car being towed

The repo man may become outmoded.

The “repo man” is that guy who cruises neighborhoods at night in a tow truck searching for vehicles driven by people who are late with their car loan payments. When he finds his prey, he hooks up the truck and hauls away the loan’s security. (But even that doesn’t end the matter. See “Does Repossession Cure Debt?” to learn more.)

Repossession Goes High Tech

Oblivious to the recent debacle in subprime home lending, auto lenders have worked hard to develop the subprime (borrowers with credit scores below 640) auto loan market, offering seven and eight year loans and other strategies designed to make monthly payments low. Sadly, many consumers have been coached by shrewd marketing into believing that if a payment fits (however tightly) into their monthly budget, that means the item is affordable!

The lenders understand very well their subprime customers’ credit riskiness, and many are moving to new technology to replace the outmoded “repo man”: a remote starter interrupt device.

What’s a Remote Starter Interrupt Device?

If you’ve ever lived in a cold climate, you’ve probably heard of a remote starter, a gizmo that lets the cold intolerant start a vehicle from the comfort of home with the push of a button so the car’s toasty inside before the owner ventures out. A remote starter interrupt device prevents a car from starting, also by the push of a button. But that button is in the hands of the lender, not the car owner.

Car Won’t Start? Be Sure You Haven’t Missed a Payment Before Calling the Mechanic

Remote starter interrupts have been installed in about two million vehicles, and are now involved in about 25% of all US subprime auto loans. Once installed, the lender can make a car inoperable with a mouse click or app tap. GPS technology included in the device allows the lender to track a vehicle’s movements and location (makes the repo man’s job a lot easier, if his service is still needed), and the interrupter emits a beep at increasing volume as a payment due date approaches.

Check out this New York Times video of one subprime borrower’s experience with a remote starter interrupt device.

What Do You Think?

Are you bothered that those with low credit scores are subjected to remote starter interrupt devices if they want to own a car, or is that a legitimate part of the price you pay for poor credit? Borrowers consent to installation of the interrupter. Of course they’d not get the loan, or a car, if they didn’t consent.

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