OT: Late on car payment? Device won't let engine start
Interrupters: Lenders are relying on them to secure payment; buyers can benefit, too
By Deborah Yo
The Associated Press
Salt Lake Tribune
sltrib.com
( How long before houses automatically lock out defaulters? )
LIMERICK, Pa. - Rashida Redd punched in a six-digit code in her Pontiac Grand Prix and got a new lease on life.
The 34-year-old Pottstown mother of five had to file for personal bankruptcy about a year ago in the face of mounting medical bills from her husband's open heart surgery.
Despite her poor credit history, Redd was able to lease the three-year-old car from Williams Pre-Owned of Limerick on the condition that it have a starter-interrupt device.
''At least I was able to save the house,'' said Redd.
The device, the size of a cigarette pack and mounted under the dashboard, flashes green if she has made a car payment on time. If she misses her $94 weekly payment, it won't let her car start.
Starter-interrupt devices are becoming a popular way for lenders to ensure they get paid, and consumers seem willing to accept them to get into nicer cars, use a smaller down payment and qualify for a lower interest rate, according to device manufacturers.
The major manufacturers of the device report double-digit increases in sales so far this year, compared with the same period a year ago.
An estimated 1 million are in use today, he said.
Consumers with poor credit often are faced with interest rates of more than 20 percent, which is nearly triple the rate drivers with good credit can get. They also have to pay a down payment equal to 10 percent to 20 percent of the car's purchase price, while buyers with good credit can purchase a vehicle with little or no money down.
Redd's car is equipped with a device made by Payment Protection Systems Inc., of Temecula, Calif. It's one of three manufacturers that dominate the market.
The companies make a variation of the same device: The units are connected to the starter and emit a brief series of sounds or flashes of light, days before the payment deadline. If the customer then makes a timely payment, he or she can contact the dealer for a new code that will allow them to operate the vehicle. Some devices are remotely controlled by dealers.
Jack Gillis, a spokesman for the Consumer Federation of America, doesn't like the idea of having a third party have control over a driver's vehicle.
''It's a rather draconian measure to take,'' he said. ''What these companies are able to do is sell cars at virtually no risk to themselves, with all the risk to consumers.''
Starter interrupters
* The device: They emit a brief series of sounds or flashes of light days before the payment deadline. A driver who still misses a payment either won't get a code with which to start the vehicle, or the dealer or lender can remotely disable the car.
* The customers: Drivers with bad credit, such as personal bankruptcy, or who have had a repossession.
* Numbers on the road: About 1 million starter-interrupt devices are in use. |
