GPS immobilizers, setup fees and other car-lease caveats in Quebec
Only sub-prime borrowers will have to deal with a GPS immobilizer, but all should be wary of illegitimate fees
If you've never heard of a GPS immobilizer, chances are you've never leased a car on bad credit.
Bury, Que., resident Daniel Lallier did just that in May, and ended up having his car remotely immobilized by the dealer over an extra $200 fee that, it turned out, was likely illegal.
George Iny, president of the Automobile Protection Association, said it's a situation that most car buyers may never face, but it's far from unique.
"If you're in the mainstream of auto financing, you will never see an immobilizer on your vehicle," he told CBC News.
Dealers use the GPS tracking device to immobilize a car remotely as an alternative to more traditional forms of repossession, like having a tow-truck show up and haul a car away.
Iny said the devices are used in cases of sub-prime borrowing, which he defined as cases of "questionable credit" or someone "who bought more vehicle than you need or than you should be driving."
These borrowers are usually lent money at interest rates ranging from 15 to 29 per cent, Iny said.
"In those cases, there are lenders that use the devices because they are very effective at keeping people on time with their payments," he said.
30-day notice required
Though his association does not oppose the device, Iny warned they can be abused and there are laws in place to regulate their use.
"In most provinces, that's a 30-day notice before you repossess," he said.
This is also the case in Quebec, where a lender cannot arbitrarily use the device to immobilize a vehicle.
But, as Iny explains, there might be another reason why the devices are gaining in popularity with some dealers.
"It's a profit centre for the lender. It's not actually just a device that they use to make sure that they're going to get their payments."
In Lallier's case, his dealer tried to charge him $200 to remove the device from his car, a fee that was not in their original contract and one Lallier refused to pay.
Such charges, Iny said, should be included in the interest rate for the vehicle.
"Many people who have immobilizers are paying a monthly charge … and some of them are paying a disconnection charge," he said. "Our sense is that's just not fair, and possibly illegal."
Beware of added fees
Iny said it's important consumers to be well-informed before signing any contract in order to avoid illegitimate fees.
"One of the concerns we're seeing more now, and it's not just the sub-prime, is dealers adding administration or other charges; setup fees to write the deal. These are on top of the advertised price for the vehicle, and they're prohibited in Quebec," he said.
"We've actually asked the Consumer Protection Office to intervene. Now they need cases. So if someone out there came in on an ad, and was charged extra above the ad price for admin, documentation fee, paperwork, we need to hear from you."
Iny said such setup fees appear on contracts written in French as "frais de mise en place."
With files from Claude Rivest