Car finance firms are fitting ‘kill switches’ that immobilise cars if drivers miss a payment. The devices, installed by lenders offering loans to those with poor credit scores, mean customers can be left stranded, but law and finance experts says the firms may be breaking the law. Drivers on kill-switch deals typically set up standing orders to pay every single month. When lender is paid, it sends the customer a code to enter by remote control into a GPS device behind dashboard. If drivers miss a payment, code for that month is not sent and the car stops working. Concerns have been raised that vulnerable drivers could be stranded overnight or unable to get to an emergency. Office worker Julia Martin told she often had to eat cereal for dinner so she can afford vehicle payments. The 32 years old took out a 3 years hire-purchase agreement with The Car Finance Company in January last year when her fiance left her 6 weeks before their wedding, taking the car they shared. Miss Martin, of Farnham, Surrey, must pay £199 a month for a 10 years old Ford C-Max worth £4’000. She will have paid £7’200 by the end of term. She said ‘I have had to take a second job and still find myself struggling each month.’


Earlier this month, young drivers were being tempted into dangerous levels of debt by offers of new cars for no money up front. The Car Finance Company offers rates of 49,6% for customers who want a zero-deposit loan. Investors wrote off £50 million in firm as so many customers were falling into arrears. To make sure they recoup loans, lenders targeting those with low credit ratings are installing devices for up to 5 years, but the law says they must apply for a court order to repossess a car if a third of the total amount has been paid.Andrew Leakey, of Stephensons Solicitors, said those affected could argue they were the victim of an ‘unfair relationship’ under Consumer Credit Act. He told ‘They shouldn’t have the power to stop the car there and then. That is before you get into data-protection issues with the box recording your movements and safety issues if a customer is stranded alone.’ Graham Hill, of National Association of Commercial Finance Brokers, said kill switches may break the law. It is believed they will form part of a Financial Conduct Authority probe into vehicle finance. Trade body Finance and Leasing Association told immobilisers were used only in ‘very limited circumstances’. The Car Finance Company did not respond to requests for any comment.

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