Thursday, September 25, 2014

The War Against Asymmetric Information: The Case of Subprime Auto Lending

This story in today’s New York Times about the use of remote technology to track and repossess cars by subprime auto lenders is, above all, very, very sad.  Life is hard for a lot of people, and it just gets harder.

But note the mention of geo-tracking to check up on borrowers:
Spireon [a technology provider] says it can help lenders identify signs of trouble by analyzing data on a borrower’s behavior. Lenders using Spireon’s software can create “geo-fences” that alert them if borrowers are no longer traveling to their regular place of employment — a development that could affect a person’s ability to repay the loan.
It’s not difficult to imagine the loan contract of the future, in which the borrower agrees to certain restrictions on travel, spending and other activities, as monitored by the lender.  Your whole life could be in receivership.


Eubulides said...

You mean compelled to agree as a condition of the loan? :-0 Now think of the Hobby Lobby decision and rfid.

Sandwichman said...

This has efficient law enforcement spin offs. People with something to hide will avoid borrowing money -- a prima facie case for suspicion of something, if you ask me. From debtors' prison to non-debtors' prison in only two centuries. That's progress!