Strict screening will make it harder for the poor, who have poor credit, to buy a car. Tracking vehicles will make lenders less paranoid about lending, which will enable less wealthy households to lend. IMO if you're wealthy ( like the vast majority of the readers of HN ) you should be able to opt out of tracking for an additional financing feel whereas the poor should still be able to voluntarily subject themselves to tracking in exchange for a more favorable rate. Personally I wouldn't care if the bank is tracking my car while it's not paid off, so I'd go for the lower rate anyway.
The "Buy Here Pay Here" car sales lots that sell primarily to low-income folks often install tracking equipment in the vehicles they sell as a part of the deal.
Ken Bensinger's 2011 LA Times series about the practices of Buy-Here-Pay-Here car sales businesses:
To me, used to the abusive interest rates here in Uruguay, 20% sounds really good.
And while the tactic they used to repossess the car was pretty shady, they were in their right. And 25% default rate is tough.
It's depressing, but the alternative would be leaving people with no financing options.
A NGO or maybe a startup that helped people balance their economies would be doing a lot of help, in the U.S. and everywhere. I've read about some that try to disrupt lenders, including a Y Combinator backed one (LendUp).
I can see a sort of opt-in thing working. And that would be better than just sending out camera equipped cars to scan all the vehicles. But in the same way that I would agree to a tracking system I would also agree to an automatic debit from my account each month. At least that way there's no location data for the government to subpoena.
