“Geo fences” being used by lenders to disable cars straying too far
Technologies such as GM’s OnStar and LoJack have been on the market for a while. Both give the ability to track a particular vehicle with some providing additional powers to slow the vehicle in question or shut it down entirely.
Even the insurance industry has used driver monitoring as a way to save on insurance premiums for those who deem themselves safe drivers.
Now, it seems, subprime lenders are getting into the game south of the border.
As part of certain subprime purchase agreements, many lenders are forcing borrowers to have their vehicles equipped with shut-down devices that allow the lender to track, and sometimes disable, vehicles if borrowers are late on payments. The lateness is sometimes as short as a single day from when the payment was due, far earlier than the 30-day window of when a borrower is considered to be ‘in default’ on their loan.
From The New York Times:
The thermometer showed a 103.5-degree fever, and her 10-year-old’s asthma was flaring up. Mary Bolender, who lives in Las Vegas, needed to get her daughter to an emergency room, but her 2005 Chrysler van would not start.
The cause was not a mechanical problem — it was her lender.
Ms. Bolender was three days behind on her monthly car payment. Her lender, C.A.G. Acceptance of Mesa, Ariz., 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.
It’s not a small number of people required to have their vehicles shackled with these devices either. Some lenders have required the devices for as many as 30 percent of the vehicles they finance.
Late payments aren’t the only trigger. Other lenders have shut down the vehicles of borrowers for straying too far away from home.
“Geo fences” are being used to shut down vehicles that leave certain zones. Lenders are rationalizing it by stating if someone goes too far from a designated area, they are less likely to be able to pay their loans.
Even worse, some have reported these remote shut downs are happening as they operate their vehicles, sometimes on busy roadways.