Future Tense

Lenders Can Remotely Disable Cars if People Don’t Pay Their Loan Bills

A bunch of these cars probably have starter interrupt devices lurking in their dashboards.

Photo by David McNew/Getty Images

Car payments are always stressful. But as subprime auto loans grow in popularity, lenders are adding a way to make sure they get paid—and making borrowers even more worried in the process. The secret weapon: starter interrupt devices, which get wired into a car’s dashboard before it rolls off the lot and allow lenders to disable a car remotely if the owner gets behind on her car payments. Fail to keep up, and your car could stop working at any time. The devices even let lenders use GPS to track the vehicles.

The New York Times reports that about 25 percent of new auto loans in 2013 were subprime, made to people with credit scores below 640. In the first three months of 2014, these types of loans totaled $145 billion. And about 2 million cars have starter interrupt devices. As you might expect, starter interrupt devices come with downsides.

The Times chronicles the experiences of multiple people who were dramatically inconvenienced or even put in danger when their cars stopped working because they were behind on a payment, sometimes just by a few days. One woman needed to take her daughter to the hospital because the girl was having an asthma attack and had a high fever, but her car wouldn’t start. Other people reported losing the ability to use their car right when their kids needed to go to school or doctors’ appointments. Some even talked about having their cars shut down while they were waiting at a red light or stop sign. One Las Vegas woman felt her car turn off while she was driving at high speed on a busy highway.

Lionel M. Vead Jr., the head of collections at First Castle Federal Credit Union in Covington, Louisiana told the Times, “I have disabled a car while I was shopping at Walmart.”

Borrowers are supposed to get codes that would allow them to restart their car for one day in case of emergency, but customers have been reporting that the codes don’t work or that they only get one a month. Additionally, the GPS tracking raises privacy concerns. Lenders claim that the location data is used only if a car needs to be repossessed, not to watch customer movements. But certain situations—like a woman having her car repossessed while she was living at a shelter to escape her abusive husband—show the technology’s sinister side.

Consumer rights lawyers and lawmakers are beginning to lobby against the devices or in favor of stricter regulations. Accountability for loans is important, but starter-interrupt devices are certainly a dark passenger.

As Robert Swearingen, a lawyer for Legal Services of Eastern Missouri, told the Times, “No middle-class person would ever be hounded for being a day late. But for poor people, there is a debt collector right there in the car with them.”