Table of Contents
As a loan option primarily for borrowers with less-than-perfect credit, car title loans and online title loans offer access to fast cash using vehicles as collateral. Some lenders use GPS tracking devices, primarily for title loans with high loan amounts, in order to secure the repayment of the loan. Continue reading to find out how these trackers work with title loans, their risks and benefits, and what borrowers should know.
The Role of GPS Trackers With Vehicle-Secured Loans
The Global Positioning System (GPS) has revolutionized how people navigate earth. With a small device like a cell phone or navigation gadget, the user can pinpoint their location on earth. As the uses of GPS have grown over the years, some asset-based lenders like title lenders, buy-here-pay-here auto lenders and equipment finance companies started to use GPS trackers for the collateral that secures their loans.
Why Lenders Use GPS Tracking
Having GPS trackers installed on the collateral securing their loans allows lenders to have real-time knowledge of the whereabouts of their loan collateral. The primary benefit to lenders is that the use of GPS trackers can provide enhanced security of loan repayment, as lenders can be more certain of their ability to repossess a vehicle if a borrower defaults on the loan. Ongoing monitoring of collateral location can also allow lenders to ensure that borrowers meet certain contract provisions. For example, many loan contracts don’t permit borrowers to remove the vehicle from the United States without the lender’s approval – lenders can use geo-fence alerts to monitor compliance with similar contract provisions. Along the same lines, in the unfortunate event of the vehicle being stolen, the GPS device can be used in an effort to recover it.
In recent years, some GPS tracking providers have also launched products that combine GPS tracking with so-called starter-interrupt features. A GPS device with starter disable feature allows lenders to remotely prevent vehicles from starting, which is used as a collection tool. When borrowers have missed one or several payments, lenders that utilize starter interruption devices use this tool to influence a borrower’s behavior and prompt a phone call or loan payment be temporarily disabling the car.
Benefits and Disadvantages of GPS Trackers for Borrowers
As mentioned above, providers of vehicle-secured loans sometimes use GPS tracking devices in order to be able to locate collateral and as a collection tool. From a borrower’s perspective, these devices come with some benefits, but also some potential disadvantages, which include:
GPS Tracking Benefits
- Access to more or larger loans: Title lenders or auto finance companies that user GPS devices may be able to approve some customers that other lenders won’t, or may be able to offer larger loan amounts, since the use of the devices can reduce the lending risk.
- Potential for lower interest rates: Lenders that successfully use auto loan GPS trackers may achieve a lower loss rate, and may be able to pass on the lower loss rate to consumers by charging lower interest rates.
- Theft recovery: If a borrower’s vehicle is stolen, both the borrower and the lender have an interest in the vehicle being found. If the car is equipped with an auto loan GPS tracker, the tracking data might help with finding the stolen car.
GPS Tracking Risks and Disadvantages
- Installation and removal: GPS tracking and starter interruption devices usually require installation, which means that borrowers need to drive to an installation location and wait while their car is equipped with the tracker. Even if the lender pays for the installation, the borrower still faces potential expense because of the drive and the time required. After the end of the loan, trackers should also be removed, which may again require time and effort by the borrower.
- Privacy concerns: Since GPS devices keep track of location data, they pose certain privacy concerns, which include the sale of location data, whether a borrower has visited sensitive locations such as medical facilities, and the unauthorized disclosure of location data to third parties.
- Risk of malfunction: While a malfunctioning GPS tracker is not a big deal, if the device also has a starter interrupt feature and malfunctions, borrowers might get stranded without their fault. Having a car not start can be a major inconvenience or even dangerous in the case of an emergency.
Call Our Team
Take the first step and call our toll-free hotline to speak with a specialist.
Consumer Rights When GPS Trackers Are Used
Subprime lenders that use GPS tracking for auto-secured loans should use them only in a compliant manner. Borrowers have several rights pertaining to the use of GPS tracking devices, which first and foremost include:
- Full and accurate disclosure of the use of a GPS device
- Requiring the borrower’s consent before installing the device
- Only using the GPS data in accordance with the disclosed and intended purpose
- Safe storage of the tracking data
In addition to the above, lenders should have a plan for the period when the loan is paid off. Borrowers should not be left on their own figuring out how to remove the GPS tracker after paying off a title loan or buy-here-pay-here car loan.
Are GPS Trackers Required for Car Title Loans Serviced by LoanMart?
No! GPS trackers are not required for car title loans serviced by LoanMart. Whether you’re a resident of Los Angeles, Phoenix, Dallas, Orlando, Wichita or any of the other cities or states covered by title loans serviced by LoanMart, there’s no need to worry about having to install a GPS device just to obtain a loan.1
If you are looking for a title loan that does not require a GPS device, apply online and get pre-qualified in minutes!
