Skip to main content

Some lenders can remotely disable cars when payments are missed

stopped-car
Image used with permission by copyright holder
Utilizing a piece of hardware called the starter interrupt device, credit unions and other types of loan companies have started mandating the use of such devices when an auto loan is issued to a customer with bad credit. Detailed by the New York Times this week, the starter interrupt device makes a car completely unusable and is activated after a customer falls behind on car payments. Likely operating over some form of cellular signal, the starter interrupt device can be activated by someone in the loan company’s office through a program on a PC or even through an application on a smartphone.

In addition to halting a car completely, the device includes a GPS function that allows the lender to track the location of the car in case repossession is required. At this time, there are approximately two million vehicles on the road in the United States with a starter interrupt device installed.

In an interview with the head of collections at a credit union, First Castle Federal Credit Union employee Lionel M. Vead Jr. has the ability to view over 800 vehicles within a mapping program at any time. According to Vead, he attempts to reach a borrower behind on payments on the phone or in person. After 30 days of non-responsiveness, Vead will disable the vehicle when it appears to be in a sitting position at the borrower’s home or workplace.

These devices are attached when the lender classifies the customer as subprime, basically someone with a credit score below the FICO rating of 640. These subprime loans come with much higher interest rates than a standard auto loan, something that the banks consider a necessity to balance out the risk of lending the money. Of course, this also makes it difficult for the customer to pay off the loan quickly due to massive interest accumulating each month.

Speaking to regulators about these devices, many borrowers aren’t happy with the level of control that’s exerted by lenders. According to the Times, borrowers claim that their vehicles were disabled when sitting at a stoplight or even when driving down the freeway just a few days after missing a payment. Of course, getting the car towed from that location is just an additional expense that penalizes the borrower even more.

Editors' Recommendations

Topics
Mike Flacy
By day, I'm the content and social media manager for High-Def Digest, Steve's Digicams and The CheckOut on Ben's Bargains…
Jeep joins the EV party with the 600-horsepower Wagoneer S
Front view of a 2024 Jeep Wagoneer S driving on a city street.

After getting things rolling with plug-in hybrids, Jeeps’ electrification plans are picking up speed. Scheduled to reach dealerships this fall, the 2024 Jeep Wagoneer S is the brand’s first EV for North America.

The Wagoneer name is right up there with Wrangler and Grand Cherokee in Jeep lore. The original Jeep Wagoneer was one of the first truly civilized SUVs and became the namesake for a modern sub-brand encompassing the Wagoneer and Grand Wagoneer, two leviathan gas guzzlers that went on sale as 2022 models. The Wagoneer S shares little with these SUVs besides a name.

Read more
The Kia EV9 is being built in Georgia — making it a whole lot cheaper
Kia EV9 GT-Line Three Quarters

Kia has officially kicked off production of the EV9 electric SUV in Georgia. That's big news for a number of reasons. First, it makes the EV9 the first EV to be assembled in Georgia. Second, it means more solid jobs in the U.S. And third, it means that the well-priced electric SUV is about to get even cheaper.

The reason for the price decrease is simple -- by moving production of the EV9 to Georgia from Korea, the SUV will now qualify for the federal EV tax credit, bringing the total price of the vehicle down by a hefty $7,500. It was already one of the more affordable electric SUVs, but the big rebate makes it even more enticing.

Read more
Kia EV3 vs EV6: How does Kia’s new EV compare with its most popular?
White Kia EV3

The Kia EV3 is finally coming, and it could end up being Kia's most popular electric car. It is also quite likely to be Kia's cheapest EV to date, while still offering high-end features, great tech, and a solid range. But, of course, the EV3 will have to compete with other Kia electric cars -- like the much-loved EV6.

The Kia EV6 was Kia's first of its latest generation of electric cars. Essentially, it was built to prove the concept of electric cars for Kia, with a stylish and unique design and an excellent range. It's fast, too -- especially the Kia EV6 GT.

Read more