Late on car payment? Lender could turn engine off remotely

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As if being behind on a car loan payment isn't bad enough, auto lenders now have the technology to remotely shut off the offending car's engine when payments are late.

Sales of the shut-off devices by one manufacturer, Littleton, Colo.-based Passtime, are up 33% over last year, and the company is increasing production to meet demand, according to an AOL Autos story.


The devices are mostly used in the subprime auto loan market, although other lenders are looking into the technology as the creditworthiness of American consumers declines as unemployment grows and home equity falls.

The devices are usually controlled remotely by the dealer or lender and are linked to the vehicle's powertrain, according to the story. Power is cut several days after the payment is due, and drivers get warnings before the deadline with a concert of tones and flashing indicators. There are also warnings after the deadline has passed.

"Right now, we are moving about 2,000 units a month into the marketplace," said Stan Schwarz, CEO of Passtime. "I fully expect by the end of the year we will be up to 14,000 to 15,000 a month."

There have been a few lawsuits and complaints about the devices shutting down the engine while the owner is driving. Manufacturers attribute them to mechanical problems not related to the devices.

They say that numerous safeguards are built in, such as not being able to shut down an engine while the car is moving, and drivers can extend the car's operation in an emergency. Customers are told in a contract that the device is in their car.

The security of the device for the lender also makes it easier for consumers with low credit, who can get a somewhat lower interest rate because the risk to the lender is less.

So what happens when the engine is turned off? How does the lender get the car back if it has to repossess it? The shut-off products also include global positioning, or GPS, to make the cars easy to find. Whether they'll still be in one piece is another question.

Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.AaronCrowe.net
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