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    Edelman, Combs, Latturner, & Goodwin, LLC

    20 South Clark Street
    Suite 1500
    Chicago, IL 60603

    info@edcombs.com
    Phone: 312-739-4200
    Fax: 312-419-0379


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    New methods of tracking and repossessing cars

     

    If you have a car with an ignition shutoff and the seller/ finance company has activated it, please contact us.

    Lenders continue to offer subprime automobile loans  aggressively to consumers with imperfect credit.

    “Don’t let bad credit stop you from getting a new car!” a voice actor exclaims in one television ad, as images of shiny sport utility vehicles appear onscreen. “At 450Credit.com, a 450 credit score, plus $450 a week in income, equals a brand-new car!”

    Advances in technology could explain why lenders continue to offer subprime car loans. While the loans are still risky, these technologies have made the process of repossessing vehicles cheaper and easier, minimizing potential losses on soured loans.

    For example, massive databases can now track the location of license plates so that lenders can quickly snatch up cars on which their owners have missed multiple payments. The past decade has also seen the proliferation of in-car devices that some lenders use to locate vehicles and lock ignitions when their customers miss payments.

    Taken together, the technologies improve the chances that auto lenders will recover their collateral.

    Repo men now are equipped with cameras that read the license plates on parked cars and compare them to lists of vehicles.  The photos get matched with GPS data and fed into a searchable database. Then auto lenders can marry that data with information from other sources in order to get a rich understanding of their customers’ daily habits.

    Privacy advocates are raising concerns about how technology has changed the repossession industry. But there’s no question that cameras have simplified the process of retrieving cars. Rather than knocking on neighbors’ doors to track down delinquent borrowers, repo men can often go straight to locations where the vehicle has been seen recently.

    Today, auto lenders are finding additional uses for these databases earlier in the lending process. For example, when a borrower fills out a loan application, the address he provides can be cross-checked with a license-plate database and other sources, in order to determine whether he is actually living at the address listed.

    Even if lenders have reason to believe a borrower is lying, some will still make the loan, according to Jackson. That’s because the lender knows where to find the car, and the borrower doesn’t know that the lender knows.

    And there are other technologies that are further changing the risk calculus for auto lenders.

    In deep-subprime lending, which Experian defines as loans to borrowers with credit scores below 550, cars often come loaded with devices that use GPS technology to track the vehicle’s movement, as well as ignition locks that can be activated remotely if the borrower misses payments.

    These devices are controversial, with some drivers reporting that they’ve found themselves stranded in the middle of an intersection after the ignition was locked.

    From the lender’s standpoint, an ignition lock can act as a powerful motivator for a borrower to pay. The devices also make the repossession process easier.

    What some lenders ignore is the fact that the activation of such a device constitutes a repossession under the Uniform Commercial Code, triggering notice requirements.

    If you have a car with an ignition shutoff and the seller/ finance company has activated it, please contact us.

    Among banks, 4% of auto loans made in the first quarter were classified as deep-subprime, and another 14% were subprime, according to Experian. Those percentages were far higher among buy-here pay-here dealers and auto finance companies.