Over the next few years, people who are thinking about purchasing a new vehicle may be in for a surprise. Many auto dealerships are outfitting new and used cars with devices which can deactivate the engine remotely. The reason: to make repossessions easier.

As more people lose their jobs, they're forced to prioritize their bills. Some bills have to wait while others are put on top of the stack. Dealers and lenders want to ensure that their customers make their payments on time. The shut-down units that are installed into automobiles provide the motivation.

In this article, I'll explain how these devices work and describe a few of the issues involved with their use. We'll also take a closer look at how they can benefit customers, dealers, and lenders.

Safety And Other Issues

The shut-off component is installed onto a vehicle's powertrain. Through telematics, a dealership or lender can remotely turn the engine off if the driver has failed to send in his or her payments. Currently, dealers are triggering the device only after a payment is several days late. Before the engine is deactivated, an indicator light will normally display on the vehicle's dashboard. Some companies will allow the deadline to pass in order to give the motorist time to send a payment.

Drivers are understandably concerned that the shut-down device can be dangerous, especially if their engine is turned off while they're driving at high speeds. Most dealers will only trigger the unit once the engine has been manually turned off or while the car is at idling speed.

Protecting Customers, Dealerships, And Lenders

The component was initially introduced for subprime borrowers. Car dealerships and lenders consider such borrowers (those with 'B' credit ratings) to present more risk. In the past, they offset the increased risk by applying a higher interest rate to auto loans. The shut-off units offer an alternative.

By installing them on a car's powertrain, dealers and lenders assume less risk. First, motorists are motivated to make their payments on time in order to avoid having their driving privileges interrupted. Second, the car can be retrieved more easily if payments are not forthcoming. As a result, subprime borrowers can enjoy a lower interest rate when buying a vehicle.

Full Disclosure

It's important to note that the shut-down devices are not hidden from prospective buyers. In effect, they know the vehicles have been equipped with them. Dealerships will usually disclose the unit's presence on forms that require the buyer's signature.

Even though the components were originally meant for the subprime car buyer market, it is likely that more dealers will outfit their vehicles with them over the next few years. In fact, a growing number of credit unions and banks are requesting the device's installation before providing an auto loan. When the time comes to purchase a new car, the component may not be an option.

Author: Eric Driver

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Article source: Free Automotive Articles.