Some cars in New Jersey come equipped with so-called "payment assurance devices." That might sound like a good thing to some, but the devices actually allow a car dealer or lender to remotely disable a vehicle if the driver is late making loan payments.

(Nobilior, ThinkStock)

Assemblyman Paul Moriarty (D-Turnersville) is co-sponsoring a bill (A-4033) to prevent motor vehicle dealers or lenders from remotely disabling motor vehicles. The legislation was approved Monday by the Assembly Consumer Affairs Committee.

"We have had information about the use of these devices where people are driving down the highway and because they're a day late on a loan, their car gets turned off while they're driving and we've had people stranded at shopping centers with their kids and they weren't able to start their car because it was turned off," Moriarty said.

Passtime is a company that makes the payment assurance devices. An official with the firm testified at Monday's hearing and told Moriarty's committee that vehicles have never been disabled while they were in use.

"The devices are placed discreetly beneath the dashboard. They won't shut off while driving. They never have," said Corrine Kirkendall, vice president of Compliance and Public Relations.

Moriarty said Kirkendall doesn't speak for every company that makes the devices.

The payment assurance devices actually let high-risk borrowers get a loan when they might not otherwise qualify, Kirkendall said. Michael Brill is president of B&B Automotive who plans to open a new dealership In Willingboro, NJ. He agreed with Kirkendall that the devices are not used to shut down moving vehicles and said he would not open the dealership if the bill becomes law. The loan aspect also troubled Moriarty.

"By using these devices, some of these car companies are reducing their (loan) default rate by 95 percent, but they're still charging people 29 percent interest. I think that that is outrageous," Moriarty said.

Committee members Assemblyman Pat Diegnan (D-South Plainfield) and Assemblyman Sean Kean (R-Wall) voted in favor of the legislation, but both lawmakers said it might be wiser to regulate the devices rather than ban them.

"As the subprime auto lending market has expanded greatly in recent years, these devices are increasingly installed on motor vehicles as a condition of securing a loan," said bill co-sponsor Assemblyman Angel Fuentes (D-Audubon) in an emailed press release.