8 ms·

I work in security and anti-fraud is the use case of last resort for terrible ideas. When you finance a car, the vehicle becomes collateral for a loan, but it

I work in security and anti-fraud is the use case of last resort for terrible ideas. When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you. A technology like this means that the vehicle still belongs to Ford, which means if something goes wrong with it, or if you get sciatica from their shitty seats, you can class action sue them into oblivion. The reason we have laws is so that people have recourse to principle, whereas when you implement something like this in hardware (a car), it's dystopian vigilantism. I realize the largest future growth market for cars is in countries without reliable legal systems, and whose evolving governments will not hamper themselves the way the US did by guaranteeing individual freedoms, but this is why discourse about tech is important, as for every innovation, there's 100 scumbags like this inventor looking to leverage it to exploit people.

lukevp 4y ago
Surely they would do this for leases instead of sales? Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford in full. The only exception would be if ford financed the car with its own financing arm. Incentives could be aligned to make leasing the preferred option for most people who are likely to miss payments then. Also I’m not sure you’re correct about the ownership and the lawsuits. Sure you can sue anyone for anything but why would this be any different from me leasing a car from ford and the same thing happening? That doesn’t seem to have been an issue for automakers so far… For the record, this sounds like a dystopian nightmare to me. I’m not in favor of the concept.
- toast0 4y ago
  > Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford in full. The only exception would be if ford financed the car with its own financing arm. Ford has a huge financing arm. And it will probably get bigger as interest rates rise, because they have more room to offer lower than market interest rates as a hidden discount without dropping the purchase price.
  - Kon-Peki 4y ago
    Their financing makes money on the differential between the rate they pay on demand notes and the rate they lend to car buyers. Anyone (well, US Persons at least) can buy the demand notes [1], which are currently paying 4.75%. So as long as they are lending at an average rate above 4.75% after defaults and other problems I guess they are in a good position. But they can also move money around internally, I suppose, to make lower rates possible. [1] https://www.ford.com/finance/investor-center/ford-interest-advantage/ https://www.ford.com/finance/investor-center/ford-interest-a...
    - Clubber 4y ago
      I've heard people opine that motor companies: Ford, GM, Harley Davidson, etc. aren't really motor companies anymore, they are finance companies and just use the vehicle as a means to get the financing paper. They are obviously both, but it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so.
      - panopticon 4y ago
        > it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so I hear this meme a lot but is it actually true? By most benchmarks cars from the last 10 years are more reliable than those from two decades ago.
        Clubber 4y ago
        It is in my experience. I used to only buy US cars until I had a brand new 2017 GM vehicle have transmission issues within 6 months of purchase. This was to replace a 2013 GM vehicle that I was having trouble with. I took the 2017 to the dealer and they fixed it for another 6 months, then the issue came back. I took it to my personal mechanic and he said I should get rid of it, so I did. GM trucks have transmission issues. Look up the "Chevy shake," for another example. I don't know about Ford, so they might still be ok, or at least better than GM. I don't want to pay $40K+ to find out though. I expect to be able to drive vehicles without major issues for about 10 years. I've done this in the past with GM vehicles, but after 2007, the two I owned had significant issues all the ones I purchased prior did not. I put significantly less than 10k miles a year on my vehicles.
- motohagiography 4y ago
  The rationale I'm using for Ford owning it is there is a compelling argument that ownership as the effect of two factors, custody and control, as it applies to data today could apply to the car, where if Ford can disable the vehicle, it has control of it, and the custody the driver has is secondary. Leasing companies are different because they license the vehicle to you for a term, whereas loan financing means it's yours. I'm not a lawyer at all, however much of my work on privacy and security has been about reconciling technology architecture and implementations with privacy and other laws and regulations, and security architecture is about allocating risk between counterparties in a technology solution, so from that view, this could be reasonably interpreted as a predatory technology.
- ubermonkey 4y ago
  N.B. that "leases" today, at least in the consumer auto world, ARE sales. They're just sales with a balloon payment due at the end. They are, in all other respects, the same as a traditional loan-based purchase.
nkozyra 4y ago
> A technology like this means that the vehicle still belongs to Ford, which means if something goes wrong with it, or if you get sciatica from their shitty seats, you can class action sue them into oblivion. Nothing prevents that from happening now, though. I'm also uncertain how reclaiming the collateral for the loan is any different in this scenario. Granted, I think this is extraordinarily gross and consumer-hostile. Aren't there myriad of options on the table for reclaiming the vehicle? How often does someone "get away" with keeping a car, anyway? That's what the repossession industry exists for.
- CydeWeys 4y ago
  Doing an actual repo is much more costly and sometimes involves doing PI stuff like trying to track down the location of the vehicle. The cost of one repo easily wipes out profits on many months' worth of interest payments.
- anonymouskimmer 4y ago
  > Granted, I think this is extraordinarily gross and consumer-hostile. It seems like a good idea for stolen autos (at least until the car can be modded to remove the ability, so recently stolen autos). As long as there are enough checks to ensure that only the owner (or law enforcement with a warrant) can repossess the car. There just has to also be a requirement that the lease holder can't lawfully repossess without a court judgement.
- astura 4y ago
  Repos are extremely costly. My friend let his car get repossessed because he did not need it anymore thinking that was easier than selling it and there wouldn't be any negatives other than on his credit. He was surprised to get sued for the cost of the repo, which was thousands plus they managed to sell the car for much less than it was worth.
  - chongli 4y ago
    I wonder how costly it would be if one of these self-driving cars killed a bystander while repo-ing itself.
nradov 4y ago
I don't think that's legally correct. Including automated repossession technology in the vehicle wouldn't cause ownership to stay with the manufacturer or dealer. Even if the manufacturer retained legal ownership it wouldn't change anything from a product liability standpoint. Many drivers lease their vehicles today instead of buying and so the vehicle still belongs to the lessor. If a person is injured by a faulty vehicle then they can potentially sue the original manufacturer anyway regardless of who happens to own the vehicle.
bm3719 4y ago
> When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you Is it not correct that the lending entity you use to purchase a vehicle is the party that legally owns it? The borrower has possession and right to use the vehicle, but the lender holds the title. That's why you get the title transferred over to your name once the balance of the load is repaid.
- impl 4y ago
  No. When you finance a car the lender gets a lien on the title. The title is still in your name. Usually one of the stipulations the lender places in their contract is that they hold the title for you in what is effectively "escrow" until the loan is paid off. Then they release the lien and send you your title. The reason they do that is because a lien gives them the ability to, within a particular legal framework, get ownership of the car if you don't pay your loan, prevent the title from being transferred to someone they don't trust, etc. It's basically just risk mitigation.
- daveslash 4y ago
  That's what I thought too. I got pulled over once and the cop asked me "Is this your car?". I replied "Well, no... the bank owns it, but they let me drive it". He was not amused, but I was not being snarky -- I took the question to mean: "Do you own this car?", and the honest answer was no - at least, as I understood it, because the owner name on the title was the bank, not mine.
  - lotsofpulp 4y ago
    I assume the majority of people would understand the cop’s question as “Are you the person responsible and have the legal right to control this vehicle right now in this very moment”.
  - SilasX 4y ago
    As others have noted, states typically have you on the title and the bank just has a lien, so I’m not sure that would even be technically accurate. And even if accurate, your tone is too lackadaisical and overclever for this kind of interaction. You could have said, “in the lay sense, yes, though the bank is the owner of record.”
lotsofpulp 4y ago
> When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you. The title stays with the lender until all the payments are made per the loan agreement. I would not say the vehicle legally belongs to a borrower until they have possession of the title. > The reason we have laws is so that people have recourse to principle, whereas when you implement something like this in hardware (a car), it's dystopian vigilantism. The legal system is costly to use. Reducing the costs to repossess collateral would reduce borrowing costs, and ultimately help borrowers with lower borrowing costs because there is less expense towards repossession.
- JamesBarney 4y ago
  If the cost of repossession is low it also means that riskier buyers are more likely to get financed.
  - lotsofpulp 4y ago
    Good point!
  - BoorishBears 4y ago
    This is a pretty naive take if you're trying to paint it as enabling an even better outcome for "riskier buyers" This article is something like 5-10 years behind reality: Right now subprime auto loans are mostly enforced with GPS trackers that buyers are usually not made properly aware of, or even worse, tricked into paying for as an add-on pitched as being for their own benefit. https://www.nytimes.com/2017/02/19/business/dealbook/gps-devices-car-loans.html https://www.nytimes.com/2017/02/19/business/dealbook/gps-dev... - There are entire businesses built on selling poor people cars at truly insane interest rates, on payments they clearly can't afford, repossessing the cars on the cheap with GPS trackers, then selling then to the next poor person with bad credit. This grift isn't new, but cheap GPS trackers and license scanners reduced the cost per repossession in a way that enabled these places to be signficantly more brazen about it. Unfortunately the two prevailing takes I see on this are "they're subprime for a reason" as if they deserve it, and "well at least someone is still giving them a chance, you need a car in this country" (and of course some well meaning but ill informed people think you can just take public transport in every part of the country) The reality is this is worse than nothing in many cases. Buy here, pay here have people pay more frequently so that they can repo a car within days not months of someone buying them. The process isn't free either, it's disruptive, and they'll continue to leech off the owner in collections. - Overall it feels like a classic case of short sightedness from society. Saying we should directly subsidized subprime people's access to affordable loans and cars would be a non-starter: It sounds like some bleeding heart charity case making the responsible pay for the irresponsible. But then we'll all indirectly fund a much worse version of that when subprime auto loans start to implode (like they're probably already starting to with the interest rate hikes...) and we're all paying to pick up the pieces in multiple ways. If the bottom falls out the car market, well right now even middle class families are taking loans with insane terms that leave them underwater in a good market. The pain will trickle up and out from just subprime lenders and cars specifically.
sacnoradhq 4y ago
In the US, a vehicle doesn't belong to someone free-and-clear if there are any liens against it. Mechanics and car loans are the primary users of this process. With leased vehicles, there's no conveyed ownership per-se because it's a glorified rental. Might need Steve Lehto to weigh-in on how much "ownership" there is in America.
astura 4y ago
>When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you. This is not true - In my state you don't get mailed the title to the car until after the loan is paid.
- lostapathy 4y ago
  You don’t get mailed the title, but it’s your name on the title that the state holds (whether on title or electronically). So you don’t have the ability to sell it directly, you still own and are responsible for it.
- bluGill 4y ago
  Many banks will hold the title for you, but the title is technically in your name. For most people there safe is a better place to keep the title, most people don't really have a good safe to store documents like this. You only need a title when you sell or move states. Either way you will need the bank involved.
necovek 4y ago
One of the bad "inventions" of software distribution: you don't own a copy, you are only licensed to use it. No surprise the dark tactic is spreading.
- kube-system 4y ago
  That is more akin to a lease.
  - necovek 4y ago
    I would find a lease more like software subscriptions. Regular licenses for software you do "buy" can be retracted but that rarely happens in practice.
idontpost 4y ago
[dead]
IanCal 4y ago
I'm not sure I really get the difference between this and having some people rock up with a truck and take my car. If they don't have the right to do that, it's theft, either way around.
majani 4y ago
Sorry, but IOT is the only way to try and make hire purchase work in a lot of poor countries (speaking as a resident of a poor country). This model has already been explored succesfully by companies such as M-Kopa Solar. If the car companies don't do it themselves, there's definitely going to be an aftermarket for this type of thing with lenders in poorer countries.
vintermann 4y ago
I sympathize, but I'm not so sure about the laws. When it comes to companies as big as Ford, they could probably get the laws rewritten if needed - or even if they didn't, whether they got sued would depend more on who they were friends with than with the jot and tittle of legal text.
TuringNYC 4y ago
The problem with your line of thinking is thinking that people truly have recourse. With a large enough player, you basically get to make the rules (see: Robosigning https://en.wikipedia.org/wiki/2010_United_States_foreclosure_crisis https://en.wikipedia.org/wiki/2010_United_States_foreclosure...)

lukevp 4y ago

Surely they would do this for leases instead of sales? Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford in full. The only exception would be if ford financed the car with its own financing arm. Incentives could be aligned to make leasing the preferred option for most people who are likely to miss payments then. Also I’m not sure you’re correct about the ownership and the lawsuits. Sure you can sue anyone for anything but why would this be any different from me leasing a car from ford and the same thing happening? That doesn’t seem to have been an issue for automakers so far… For the record, this sounds like a dystopian nightmare to me. I’m not in favor of the concept.

toast0 4y ago
> Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford in full. The only exception would be if ford financed the car with its own financing arm. Ford has a huge financing arm. And it will probably get bigger as interest rates rise, because they have more room to offer lower than market interest rates as a hidden discount without dropping the purchase price.
- Kon-Peki 4y ago
  Their financing makes money on the differential between the rate they pay on demand notes and the rate they lend to car buyers. Anyone (well, US Persons at least) can buy the demand notes [1], which are currently paying 4.75%. So as long as they are lending at an average rate above 4.75% after defaults and other problems I guess they are in a good position. But they can also move money around internally, I suppose, to make lower rates possible. [1] https://www.ford.com/finance/investor-center/ford-interest-advantage/ https://www.ford.com/finance/investor-center/ford-interest-a...
  - Clubber 4y ago
    I've heard people opine that motor companies: Ford, GM, Harley Davidson, etc. aren't really motor companies anymore, they are finance companies and just use the vehicle as a means to get the financing paper. They are obviously both, but it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so.
    - panopticon 4y ago
      > it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so I hear this meme a lot but is it actually true? By most benchmarks cars from the last 10 years are more reliable than those from two decades ago.
      - Clubber 4y ago
        It is in my experience. I used to only buy US cars until I had a brand new 2017 GM vehicle have transmission issues within 6 months of purchase. This was to replace a 2013 GM vehicle that I was having trouble with. I took the 2017 to the dealer and they fixed it for another 6 months, then the issue came back. I took it to my personal mechanic and he said I should get rid of it, so I did. GM trucks have transmission issues. Look up the "Chevy shake," for another example. I don't know about Ford, so they might still be ok, or at least better than GM. I don't want to pay $40K+ to find out though. I expect to be able to drive vehicles without major issues for about 10 years. I've done this in the past with GM vehicles, but after 2007, the two I owned had significant issues all the ones I purchased prior did not. I put significantly less than 10k miles a year on my vehicles.
motohagiography 4y ago
The rationale I'm using for Ford owning it is there is a compelling argument that ownership as the effect of two factors, custody and control, as it applies to data today could apply to the car, where if Ford can disable the vehicle, it has control of it, and the custody the driver has is secondary. Leasing companies are different because they license the vehicle to you for a term, whereas loan financing means it's yours. I'm not a lawyer at all, however much of my work on privacy and security has been about reconciling technology architecture and implementations with privacy and other laws and regulations, and security architecture is about allocating risk between counterparties in a technology solution, so from that view, this could be reasonably interpreted as a predatory technology.
ubermonkey 4y ago
N.B. that "leases" today, at least in the consumer auto world, ARE sales. They're just sales with a balloon payment due at the end. They are, in all other respects, the same as a traditional loan-based purchase.

nkozyra 4y ago

> A technology like this means that the vehicle still belongs to Ford, which means if something goes wrong with it, or if you get sciatica from their shitty seats, you can class action sue them into oblivion. Nothing prevents that from happening now, though. I'm also uncertain how reclaiming the collateral for the loan is any different in this scenario. Granted, I think this is extraordinarily gross and consumer-hostile. Aren't there myriad of options on the table for reclaiming the vehicle? How often does someone "get away" with keeping a car, anyway? That's what the repossession industry exists for.

CydeWeys 4y ago
Doing an actual repo is much more costly and sometimes involves doing PI stuff like trying to track down the location of the vehicle. The cost of one repo easily wipes out profits on many months' worth of interest payments.
anonymouskimmer 4y ago
> Granted, I think this is extraordinarily gross and consumer-hostile. It seems like a good idea for stolen autos (at least until the car can be modded to remove the ability, so recently stolen autos). As long as there are enough checks to ensure that only the owner (or law enforcement with a warrant) can repossess the car. There just has to also be a requirement that the lease holder can't lawfully repossess without a court judgement.
astura 4y ago
Repos are extremely costly. My friend let his car get repossessed because he did not need it anymore thinking that was easier than selling it and there wouldn't be any negatives other than on his credit. He was surprised to get sued for the cost of the repo, which was thousands plus they managed to sell the car for much less than it was worth.
- chongli 4y ago
  I wonder how costly it would be if one of these self-driving cars killed a bystander while repo-ing itself.

nradov 4y ago

I don't think that's legally correct. Including automated repossession technology in the vehicle wouldn't cause ownership to stay with the manufacturer or dealer. Even if the manufacturer retained legal ownership it wouldn't change anything from a product liability standpoint. Many drivers lease their vehicles today instead of buying and so the vehicle still belongs to the lessor. If a person is injured by a faulty vehicle then they can potentially sue the original manufacturer anyway regardless of who happens to own the vehicle.

bm3719 4y ago

> When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you Is it not correct that the lending entity you use to purchase a vehicle is the party that legally owns it? The borrower has possession and right to use the vehicle, but the lender holds the title. That's why you get the title transferred over to your name once the balance of the load is repaid.

impl 4y ago
No. When you finance a car the lender gets a lien on the title. The title is still in your name. Usually one of the stipulations the lender places in their contract is that they hold the title for you in what is effectively "escrow" until the loan is paid off. Then they release the lien and send you your title. The reason they do that is because a lien gives them the ability to, within a particular legal framework, get ownership of the car if you don't pay your loan, prevent the title from being transferred to someone they don't trust, etc. It's basically just risk mitigation.
daveslash 4y ago
That's what I thought too. I got pulled over once and the cop asked me "Is this your car?". I replied "Well, no... the bank owns it, but they let me drive it". He was not amused, but I was not being snarky -- I took the question to mean: "Do you own this car?", and the honest answer was no - at least, as I understood it, because the owner name on the title was the bank, not mine.
- lotsofpulp 4y ago
  I assume the majority of people would understand the cop’s question as “Are you the person responsible and have the legal right to control this vehicle right now in this very moment”.
- SilasX 4y ago
  As others have noted, states typically have you on the title and the bank just has a lien, so I’m not sure that would even be technically accurate. And even if accurate, your tone is too lackadaisical and overclever for this kind of interaction. You could have said, “in the lay sense, yes, though the bank is the owner of record.”

lotsofpulp 4y ago

> When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you. The title stays with the lender until all the payments are made per the loan agreement. I would not say the vehicle legally belongs to a borrower until they have possession of the title. > The reason we have laws is so that people have recourse to principle, whereas when you implement something like this in hardware (a car), it's dystopian vigilantism. The legal system is costly to use. Reducing the costs to repossess collateral would reduce borrowing costs, and ultimately help borrowers with lower borrowing costs because there is less expense towards repossession.

JamesBarney 4y ago
If the cost of repossession is low it also means that riskier buyers are more likely to get financed.
- lotsofpulp 4y ago
  Good point!
- BoorishBears 4y ago
  This is a pretty naive take if you're trying to paint it as enabling an even better outcome for "riskier buyers" This article is something like 5-10 years behind reality: Right now subprime auto loans are mostly enforced with GPS trackers that buyers are usually not made properly aware of, or even worse, tricked into paying for as an add-on pitched as being for their own benefit. https://www.nytimes.com/2017/02/19/business/dealbook/gps-devices-car-loans.html https://www.nytimes.com/2017/02/19/business/dealbook/gps-dev... - There are entire businesses built on selling poor people cars at truly insane interest rates, on payments they clearly can't afford, repossessing the cars on the cheap with GPS trackers, then selling then to the next poor person with bad credit. This grift isn't new, but cheap GPS trackers and license scanners reduced the cost per repossession in a way that enabled these places to be signficantly more brazen about it. Unfortunately the two prevailing takes I see on this are "they're subprime for a reason" as if they deserve it, and "well at least someone is still giving them a chance, you need a car in this country" (and of course some well meaning but ill informed people think you can just take public transport in every part of the country) The reality is this is worse than nothing in many cases. Buy here, pay here have people pay more frequently so that they can repo a car within days not months of someone buying them. The process isn't free either, it's disruptive, and they'll continue to leech off the owner in collections. - Overall it feels like a classic case of short sightedness from society. Saying we should directly subsidized subprime people's access to affordable loans and cars would be a non-starter: It sounds like some bleeding heart charity case making the responsible pay for the irresponsible. But then we'll all indirectly fund a much worse version of that when subprime auto loans start to implode (like they're probably already starting to with the interest rate hikes...) and we're all paying to pick up the pieces in multiple ways. If the bottom falls out the car market, well right now even middle class families are taking loans with insane terms that leave them underwater in a good market. The pain will trickle up and out from just subprime lenders and cars specifically.

sacnoradhq 4y ago

In the US, a vehicle doesn't belong to someone free-and-clear if there are any liens against it. Mechanics and car loans are the primary users of this process. With leased vehicles, there's no conveyed ownership per-se because it's a glorified rental. Might need Steve Lehto to weigh-in on how much "ownership" there is in America.

astura 4y ago

>When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you. This is not true - In my state you don't get mailed the title to the car until after the loan is paid.

lostapathy 4y ago
You don’t get mailed the title, but it’s your name on the title that the state holds (whether on title or electronically). So you don’t have the ability to sell it directly, you still own and are responsible for it.
bluGill 4y ago
Many banks will hold the title for you, but the title is technically in your name. For most people there safe is a better place to keep the title, most people don't really have a good safe to store documents like this. You only need a title when you sell or move states. Either way you will need the bank involved.

necovek 4y ago

One of the bad "inventions" of software distribution: you don't own a copy, you are only licensed to use it. No surprise the dark tactic is spreading.

kube-system 4y ago
That is more akin to a lease.
- necovek 4y ago
  I would find a lease more like software subscriptions. Regular licenses for software you do "buy" can be retracted but that rarely happens in practice.

idontpost 4y ago

[dead]

IanCal 4y ago

I'm not sure I really get the difference between this and having some people rock up with a truck and take my car. If they don't have the right to do that, it's theft, either way around.

majani 4y ago

Sorry, but IOT is the only way to try and make hire purchase work in a lot of poor countries (speaking as a resident of a poor country). This model has already been explored succesfully by companies such as M-Kopa Solar. If the car companies don't do it themselves, there's definitely going to be an aftermarket for this type of thing with lenders in poorer countries.

vintermann 4y ago

I sympathize, but I'm not so sure about the laws. When it comes to companies as big as Ford, they could probably get the laws rewritten if needed - or even if they didn't, whether they got sued would depend more on who they were friends with than with the jot and tittle of legal text.

TuringNYC 4y ago

The problem with your line of thinking is thinking that people truly have recourse. With a large enough player, you basically get to make the rules (see: Robosigning https://en.wikipedia.org/wiki/2010_United_States_foreclosure_crisis https://en.wikipedia.org/wiki/2010_United_States_foreclosure...)