New Technology Enables Lenders to Shut Down Cars

Lenders have a vicious new way of forcing you to make your car payments. They can now shut down your vehicle at the touch of a button or an app.

Wireless startup interrupt devices installed in cars and GPS technology allow lenders to simply shut vehicles down, The New York Times DealBook reported. The devices are often installed on vehicles sold with subprime auto loans—in other words, loans to people with lousy credit.


What’s even scarier is that the lenders can even track a vehicle’s location. GPS technology lets a lender see where you drive; for example, if you take the vehicle to another state.
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Around two million vehicles nationwide now have starter interrupt vehicles installed on them, according to The Times. Such devices are one of the factors fueling a boom in “subprime auto lending” that The Times compared to the subprime mortgage crisis that led to the economic meltdown of 2008.

The advance in technology is making it possible to make auto loans available to a larger percentage of the population. Many poor people that would have never been able to buy cars before now have vehicles. Unfortunately, such loans are also open to a lot of abuse.

Some of the subprime auto loans have interest rates of up to 29%, The Times reported. Lenders are literally using startup interrupt devices to extort money from the poor. They will shut down the car if a payment is a few days late. Others will shut down vehicles if they drive outside of a certain area.

One woman in Nevada even reported that her car shut down while she was driving on the freeway. Other borrowers have found themselves stranded in the middle of nowhere after their vehicle stopped running.

The technology works similar to the telematics devices that some auto insurance companies promote. Such devices allow insurers to track cars and monitor drivers’ habits, which can enable them to offer lower rates to some drivers.

Critics have alleged that such devices allow lenders to get around state laws on repossession. In most places, a lender will have to wait 30 days or longer after a payment is missed to repossess a vehicle. Lenders can shut down the vehicle as soon as a payment has been missed. That means lenders could shut off a vehicle in a situation with an honest misstep, such as a payment that was late in the mail.

This story should give those that want to install such devices pause. It should also raise some disturbing questions about Google’s self-driving car technology. Will Google be able to take advantage of it perhaps to have a car that drives itself back to the dealer if you don’t make the payments?


One wonders if such features will come standard on cars in the future. That’ll make it easier for auto manufacturers to sell new cars to virtually anybody but also easier for them to repossess vehicles.

We need to ask ourselves the question, do we want to give lenders control over our lives for the privilege of driving? More importantly, do we want car loans to turn into 21st century-style debt peonage? Government regulation is needed and now, before this gets out of hand.
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