Dealers and Lenders Use Starter-Interrupt Devices to Reduce Risk
More nonprime auto lenders and buy here-pay here dealerships are equipping vehicles with starter-interrupt systems to get overdue loan payments from customers.
More nonprime auto lenders and buy here-pay here dealerships are equipping vehicles with starter-interrupt systems to get overdue loan payments from customers.
The starter-interrupt devices consist of a small keypad that installs in the dashboard. Drivers must input a code the lender gives them before they can drive the vehicle. If they miss a loan payment, the code stops working.
Gordon Howard Associates Inc. is one company that manufactures the devices. It says it has sold about 160,000 of its PassTime devices to about 1,600 auto dealers, The Wall Street Journal reported.
The PassTime system alerts the driver that a payment due date is coming by sounding for 20 seconds. Three days before the due date, the keypad displays a countdown. One day before payment is due, the number one flashes and the devices beeps. The code expires if the payment isn´t made and the car will not start.
The devices help lenders and dealers reduce the risk of financing customers with bad credit. Delinquency rates dropped from 29 percent to 7 percent with the device, according to Leedom & Associates, a dealership consulting company.
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