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Clark Howard's Tips

Dealerships' device stops delinquent drivers

November 22, 2004

About four years ago, Clark talked about a device that was developed at the request of a car dealer in Detroit. The car dealer wanted to offer auto loans to people with bad credit without having to charge huge interest rates, but he wanted to be able to stop them from driving if they default on the loan.

So he created a device that would basically shut down the car if they hadn't paid. He had a remote control to activate the device.

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At the time, there was a lot of opposition to these devices. But it's now growing like gangbusters around the country. About 1600 dealerships are installing the devices in cars.

The device looks similar to the self-service debit and credit card machines you see at grocery stores and retailers. You punch in a code each time you start your car, which also helps prevent theft.

Turns out it works too. One in three regular drivers are delinquent on their car loans, according to the Wall Street Journal. Of people with these devices, only 7 percent are delinquent. It completely changes the level of risk with the driver.

The Consumer Federation of America is very opposed to these devices because of the invasion of privacy, but Clark thinks it's a great compromise. He thinks people should have a pretty good idea that they will get paid back when they loan money to others.

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