Santander to Stop Tracking, Kill Switches

Santander Consumer USA Holdings, one of the country's biggest subprime auto lenders, has decided against further use of GPS-tracking and ignition kill switch technology as regulators clamp down on the devices, an executive said. Car lenders use the devices to help them find and repossess cars when borrowers default on loans, which is becoming increasingly common amid a lending boom. Bloomberg reported last week that the U.S. Federal Trade Commission is looking at the technology as part of a larger investigation into abuses in auto lenders' collection practices. It has asked at least two lenders for information. Finance companies and banks are looking to cut their losses on bad loans after volume has surged. Total car loans outstanding in December were $1.16 trillion, including both prime and subprime, up more than 45 percent since the fourth quarter of 2008. As loans have grown, delinquencies have as well. Borrowers were at least 60 days behind on about 5 percent of subprime auto loans in December, a figure that has steadily risen since at least 2010, when around 3 percent were overdue, according to S&P Global Ratings. When lenders do repossess cars, they are recovering less money from selling the assets. In November recovery rates on subprime borrowers whose loans were bundled into bonds fell to about 34 percent, down from around 38 percent in the year before, S&P data show. Analysts and industry executives expect that figure to fall further as a flood of leases are due to end in the coming year and beyond. When they are auctioned off, car prices could fall more. Source: dallasnews.com.