Pay or else: Gadget disables cars if payment isn't on time

Charlotte Observer ^ | 09/16/03 | LENA WARMACK

[bedolido]

ARLINGTON - Randy Rapp, owner of Don Rapp Motor Co., a family-owned and -operated used-car business in Arlington, was frustrated with customers falling behind on their car payments.

"I'd get people sometimes that would run off in one of my cars because they can't pay me and they get desperate and I'd lose two to three cars a year; it's a serious problem for me," Rapp said.

That was four years ago. Today, Rapp, 47, has solved the problem with a small gadget called On Time.

The unobtrusive device is installed under vehicle dashboards. The device reminds a car owner when a payment is due by beeping and flashing a red light. If the bill isn't paid on the due date, the car cannot start without a six-digit code from the dealer or finance company.

"It's become the collection tool for the finance company," said Mike Simon, chief executive and president of Payment Protection Systems in Temecula, Calif. "We have changed people's behavior through technology."

He said finance companies are more willing to lower the interest rates for people with bad credit with the assurance that customers will make their payments.

Since introducing the device in 1999, the privately owned company has experienced 40 percent growth annually, Simon said.

To date, about 90,000 systems have been sold. More than 400 used-car dealerships in the United States and Canada use it.

Dealerships, leasing businesses and finance companies buy them for $220 to $260 each, depending on the volume.

In five years, Simon said, the business plans to expand into Latin America and Europe by reaching larger finance companies.

"Every finance company has the same problem when it comes to financing their cars; it's getting people to make their payments," he said.

However, the device is not without detractors.

"People with credit problems or those in the subprime market have enough problems without having to be burdened with a car with this device," said Jack Gillis, author of The Car Book and public affairs director for Consumer Federation of America in Washington, D.C.

Gillis said the product could have grave problems in cases of emergency situations and safety concerns might arise if it were to malfunction while driving in traffic.

"They [customers] shouldn't necessarily be put in a situation where they have an additional penalty and suddenly their car shuts off," Gillis said.

Simon said there have been no malfunctions and the device keeps a driver from starting the car without entering a code. Customers also get an emergency code they can use on three occasions.

Gillis said the device benefits the car dealers and not the consumers. He advises consumers with bad credit to buy less expensive automobiles.

Rapp has 300 customers, mostly from low- to moderate-income levels and with bad credit or no credit at all. A little more than half, about 160, have the device in their automobiles to ensure they make biweekly payments of $120 to $150.

"This isn't a complete answer and it's not a 100 percent sure but what it does is it keeps them from taking my cars," he said. "Now, they bring my cars back because they can't get the code to drive it."

Rapp said since using the device, only 5 percent of his customers have missed their car payments. And not only has he not lost any cars, he has also saved money on repossession fees.

Rapp said his company's repossession rate decreased from 100 cars in 2002 to 30 cars in 2003.

"It's been good for them [customers] because it makes them a lot more responsible and helps their credit by making them pay on time," Rapp said. "I spend a whole lot less time chasing people."

-------------------------------------------------------------------------------- Lena Warmack, (817) 548-5514 lwarmack@star-telegram.com

[bedolido]

STAR-TELEGRAM/PAUL MOSELEY Arlington used-car dealer Randy Rapp shows an On Time unit that ensures customers will make their car payments -- or the device disables the car.

[CSM]

"People with credit problems or those in the subprime market have enough problems without having to be burdened with a car with this device," said Jack Gillis,

People shouldn't be burdened with buying things they can't afford!

[HEY4QDEMS]

Gillis said the device benefits the car dealers and not the consumers 'deadbeats'

well duhh!!

[Walkingfeather]

great until an psycho ex husband is chasing your daughter.... then

[Pest]

Actually, it does benefit the consumers because they can qualify for a lower intererst rate.

[Poohbah]

great until an psycho ex husband is chasing your daughter.... then

It certainly behooves one to actually make the payment, doesn't it?

[HEY4QDEMS]

Tell your daughter to make her payments.

[RightWhale]

"We have changed people's behavior through technology."

What about the loss of freedom and liberty? What could be next, transplanted hearts that stop when you get behind on your hospital bill?

[ATOMIC_PUNK]

And 2 wires disable it making it usless to the car dealer

[Poohbah]

What about the loss of freedom and liberty?

Yeah, it's pure hell when theft doesn't work, isn't it?

[Poohbah]

If it's talking to the engine computers...two wires do NOT disable it, they just cripple the car.

[L,TOWM]

One of my favorite Jeff Foxworthy routines:

Hey, I've had the repo man show up at the door, I usually met him at the door with the keys. They'd tell me "We have to take the car unless you've got $200.00 you can pay us." I'd try to hand them the keys, and then they would ask "You can't even give us a check?"

"Oh, you'll take a check? Suuuuurrrrrrre, I can give you a CHECK, ya see, I thought you guys wanted MONEY..."

[Larry Lucido]

Cars have also been known to not start, or to stop suddenly, when you fail to put gas in at certain intervals. Yes, there is a flashing light that warns you it's time to put gas in, but it's not fair that we should have to pay to keep our cars running. This benefits the oil companies, not the consumer. It's an outrage!

[Lokibob]

There is a big difference between qualify and actually getting a lower interest rate.

Take 5% off the interest rate and I'd bet people would be begging for this device.

[Pan_Yans Wife]

How is that relevant?

[N3WBI3]

It does not disable a car when running, its stops it from being started and they have an emergency code..

[N3WBI3]

What loss of liberty, I dont own my car the tile beloges to charter one, and I will get it in a bit over a year. You dont have a right to own a financed car..

[Guillermo]

Whop has the freedom and liberty to become a deadbeat?

If you don't like the device, don't buy a car with one.

[F.J. Mitchell]

That's a new twist- up until now, every mechanical thing on earth has been designed to become disabled the second the final payment was made.

[Orangedog]

Anyone who buys a car with one of these things and isn't smart enough to remove it deserves to have their car stop running when a payment gets lost in the mail.

The car didn't need that little box to run when it was built, so removing it shouldn't require Werner Von Braun level expertise.