Financing Your Car The Black Box Way
Financing Your Car The Black Box Way
December 11, 2014
We're used to devices being fitted to our cars for insurance purposes, but how about one that stops the vehicle working if you don't keep up with your finance payments? Geoff Maxted investigates.
We use financial credit in many ways. We borrow money to enable us to buy the things we want and that obviously includes cars. To protect their investment, lenders use credit ratings and the like to assess our financial security, yet either by design or unfortunate circumstance these things can sometimes go wrong. Lending money is the original risk business.
We are all very much aware of the cost of car insurance these days and some, usually newly qualified, drivers are electing to have a ‘black box’ device fitted which monitors driving performance. A good driver can earn the reward of a lower premium. This idea of a technology that supports the user has now branched out into the world of car finance in the form of a ‘payment box’.
Heralding, as always seems to be the case, from America - where there have been many problems with debt in what is usually described as the ‘sub-prime’ market - lenders are now increasingly considering it for potential customers who may have a shaky credit background.
Essentially, the payment box is a little device which is fitted to your prized purchase when you take out car finance through a car dealer or finance company. The way it works is that before your payment is due each month, the box will begin to flash to let you know that it is time for this month’s instalment. Fail to meet the deadline and your vehicle can be shut down remotely and will become dead to you - at least until you have taken steps to settle the outstanding amount. If the default is serious then the device can be used to locate the car and you can expect a visit from some steely-eyed fellows with a low-loader and a determined attitude.
When you have made your payment by the due date or later a code is supplied by the lender which you duly enter; the box settles down and you drive on until the next due date when the box will again wink at you in a manner that once again suggests payment up front is preferred.
The use of this technology is disputed in that some say it is an invasion of privacy. In fact, car finance statistics collected by Stoneacre show that opinion is split roughly into thirds with 34% of us being roundly affronted, 35% thinking it is a good idea and 31% not fussed either way. The thing is, unlike the insurance ‘black box’, it doesn’t monitor your driving habits - it just wants the money.
It’s perhaps a good idea to see it from the lender’s point of view. Over the past few years our economy has been built on shifting sands. Job security isn’t what it was and there has been a rise in debtors as consumers creditworthiness is called into question, so it should come as no surprise that finance companies want to armour themselves against future risk.
Use of this technology is really only just arriving in the UK so the jury remains stubbornly undecided but, given time, borrowers should expect schemes like this to eventually filter out to mainstream lenders and possibly the high street banks. The other thing to remember of course is that acceptance of the technology does not imply success with the loan application. Lenders will still want to see evidence that the monthly payments can be met from regular income.
It might however help someone who is on the way back up from the bowels of the money pit and beginning to get back onto a secure financial footing. Arguably, it could even help credit rating if the loan is properly fulfilled. It all depends; is it intrusion or is it a boon? You pay your money and take your chance or, in this case, you pay your money or take the bus.