TRENTON, N.J. – Gov. Chris Christie has signed legislation that regulates the use of remote ignition disabling or “Kill-Switch” devices used by auto lenders and dealers to enforce payments.
According to the New Jersey Credit Union League, at least one credit union in the state has discontinued offering these loans because of the legislation.
“Members with impaired credit will now have to pay higher rates when financing a car, and may be forced to do business with less scrupulous lenders,” the league said.
The legislation targets so-called “payment assurance” devices that give lenders the ability to locate an automobile and disable its starter after missed payments. Initially proposed as a prohibition, the New Jersey league said it successfully worked with the sponsors on regulatory standards as an alternative to an outright ban.
While the legislation was amended to permit the use of such devices, the NJCUL said it continued to oppose it because of two provisions—the interest rate cap and the prohibition against making the borrower responsible for cost of the device. The NJCUL said it registered its opposition with the Governor’s Office.
In addition to some technical changes, the governor’s conditional veto let stand the fee prohibition but said the interest rate cap should be eliminated as the League had argued.
This new law takes effect July 1.