Question

please do 3 short paragraphs!

thank you!!

Many people need a car to get to work, take care of their families, live their lives. But obtaining an auto loan can be difficult for those with a bad credit rating. Some finance companies are now willing to extend credit to people who are poor risks, on one condition: The company can install on the car a tracking software with ability to disable the ignition if debtors miss a payment. This practice has left drivers stranded on highways and in dangerous neighborhoods. Is this practice unfair? Do the benefits of obtaining a loan outweigh the harm caused by this violation of privacy and loss of control?

Write your discussion post in three paragraphs: in the first paragraph, refer to law and how you would respond as a consumer who needs a car and this condition about your car loan. Write the second paragraph from the standpoint of a business offering credit upon this condition. In the third paragraph write your thoughts about if it is fair, and/or right to offer in the 21st century? Why or why not?

Answer 1

People having a bad credit rating have traditionally faced rejections and poor responses to their loan applications. The law is designed in a way such that losses to the finance companies can be minimized. The law is designed to discourage people with higher default risks from getting further credit and further defaulting on them. Credit defaults tend to bigger problems in the ecosystem. The losses faced by credit providers are then passed on to the people with good credit profile. The law thus aims at minimizing the burden of default by people with low credit score on those with good credit history. While the intention behind the law is respectable, a consumer in this situation is deprived of possessing a car, which is by and large, a necessity in current situation. Car is needed to go to work place, provide safety and security to family members while they are travelling and live a basic life. The existence of such a law is indeed very discouraging for a consumer in such a situation.

The business offering a loan to a consumer in such a situation, needs protection against future default. Such businesses do face the risk of loss of capital on default from people with bad credit score or history. In order to mitigate the risk, the credit providers do need extra checks ad balances to ensure that borrower pays the loan servicing installment on time. They need a control in the entire system and hence they have put the condition that credit will be extended, however if you skip any of the mortgage payments then the exact location of the car can be tracked, asset be invoked and take under custody to cover the risk. It's a preventive and precautionary measure by the lenders to keep the things under their control.

It's very difficult to say whether such a practice by lending institution is fair or unfair. Every individual, business and entity continuously strive to cover its risks and finance companies are no exception. Such a practice is common since the dawn of human civilization and nothing new to 21st century. The provider of capital needs its capital back so that further credit can be provided to the others in need. Hence, i believe such a practice is ethically and otherwise fair though it may not be in favor of humanity. However, businesses and humanity need to be kept separate. I therefore, am in favor of such a practice however, I also believe more humanitarian aspects can be built around the same. There should be warning and some limited travel hours should be allowed before turning the ignition off completely, in case of default. This warning and limited hours concept will allow the borrower, a sufficient time, to drive down to a secure and safe place. The instances of getting stranded on highways and dangerous neighborhood will reduce considerably if such a small humanitarean measure is introduced.