A couple stories in the mainstream media over the past weekend prompted some thought about collections and credit unions, and we’d like your opinion.
The first was an NBC News story dated Saturday, Oct. 5, and headlined Lenders Remotely Disable Car When Payments Are Late.
Without citing a source, the reporter says a growing number of lenders are requiring such starter-interrupters in the vehicles they finance. The report also says that about 30% of car loans nowadays are subprime, but does cite Equifax for that fact.
The NBC report goes for the jugular. “I hate them,” is the first answer from the borrower in Las Vegas about the finance company that disables her minivan from afar when she’s late on payments. It’s happened a few times, she says, and now she’s suing with the help of a Silver State legal advocacy group. “It’s the virtual repo man versus the single mother,” the NBC reporter intones.
The borrower says she has been left at times unable to do such things as take her daughter to an urgent care clinic. She also says she was never told about the device when she bought the car. The lender begs to differ and says it was in the loan documents she signed. They also disagree over how much time she has to make payments before the “off” switch is pulled, and the lawyer interviewed cites state law supporting the single mom, who notes that she’s never been in default.
The broadcast story also quotes an auto dealer — Bubba Hill Auto Plaza somewhere in Florida (a Google search finds it in Panama City) — who does say he’s only used the devices about a dozen times in five years and that having that option enables him to sell cars to consumers who otherwise couldn’t afford the ride, especially nicer, newer cars.
The second was an opinion piece in the New York Times on Sunday, Oct. 5, and was titled A Debt Collector’s Day. In it, the author — who’s writing a book about lending and collections — spends time on the phone trying to collect on debt purchased by third-party collectors.
The broadcast piece pulled the predictable emotional triggers, but the Times story, while more nuanced and sympathetic to collectors that follow the law, also targeted the dark side of lending to consumers who often can’t or won’t pay. The work is typically tough and low paying, pitting poor people (some with legal issues of their own) against poor people for the sake of rich people, the author implies.
And while credit unions were not mentioned in either piece, they’re likely lumped in the public mind in that big lineup of “lenders.” Some do use the vehicle starter-interrupters. Credit unions also hire third-party collectors.
One take on these pieces is that they put in stark relief the need for credit unions to publicize — through social media, paid media, word of mouth, however — their more consumer-friendly approach to lending and collecting.
There certainly are other interpretations. Please share yours in the comment space below.