Paying your car loan late might get you disabled

Paying your car loan late might get you disabled

If you have ever been late paying a loan, whether to a bank, car dealer or even your room mates, you know the terrible feeling of not wanting to face them until you can pay the loan. Dodging the agent in charge of the repossession of a car when the borrower has defaulted on payments has become so common that he has a name of his own, the repo man. Finance companies and car dealers have had to spend large sums of money paying companies to chase their bad debts, often signing these debts off as hopeless. Technology has come to finance companies and auto dealers rescue. How is that so? Various companies now provide dealers and finance companies with satellite linked locators that are installed in cars. If the owner defaults on the payments of his car loan the finance company can switch on the locator and disable the car. Read on to find out how they work and what effect they are having on the car loan industry.

How do they work?

These disablers are attached to the dashboard of your car and linked to the ignition of your vehicle. If the so called disablers are switched on the car becomes inoperable because you can’t start the engine. The palm sized disablers are linked by satellite and can be located everywhere and anywhere, no more hiding the car in the garage or out in the woods.

Are they legal?

Sadly for dodgy borrowers, they are. However the auto dealer or lending company must inform the buyer of their existence and formalize it in a contract. Finance companies will include it in the finance paperwork.

However just because they are legal, doesn’t mean they are desirable. You would be well advised to look for alternative finance that does not include a disabler.

Nevertheless the chances are that those who are required to have one in order to qualify for finance don’t have that many choices. In fact these disablers have allowed credit and finance countries to provide finance to customers that previously would have been too risky. What is more, some finance companies will actually provide incentives for customers that allow the dealer to install them.

What has been the effect?

The effect has been a marked increase in the number of installments paid on time. As one of the manufacturers explains, the whole idea is based on the principle that you are more likely to act if the effects are immediate. For example, most of us pay our water, electrical and phone bills on time because we know they will be cut off if we don’t. The disabler simply takes this an extra step by applying the principle to the auto industry. If you have previously struggled to build a good credit history due to being late in your payments, this arrangement might even help you to improve your credit score.