Jewish World Review
http://www.jewishworldreview.com | (KRT) ARLINGTON, Texas - Randy Rapp, owner of Don Rapp Motor Company, a family-owned used-car business, was frustrated with customers falling behind on their car payments or high-tailing it.
"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, said he has solved the problem with a small electronic 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 officer and president for Payment Protection Systems in Temecula, Calif., which manufactures On Time. "We have changed people's behavior through technology."
He said finance companies are more willing to lower the interest rates for those with bad credit with the assurance that customers will make their payments.
Since launching the device in 1999, Simon said the privately owned company has experienced 40 percent growth annually.
To date, about 90,000 systems have been sold. More than 400 used-car dealerships in the United States and Canada use the technology.
Dealerships, leasing businesses and finance companies buy them for $220 to $260 each, based on quantity.
Within five years, Simon said, he plans to offer the device in Latin America and Europe.
"Every finance company has the same problem when it comes to financing their cars: It's getting people to make their payments," he said.
The device is not without detractors.
"People with credit problems or those in the sub-prime 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 potentially grave consequences in emergencies, and safety concerns could arise if it malfunctions while the car is in traffic.
Simon said there have been no malfunctions, and the device keeps a driver from starting the car unless a code is entered. Customers also get an emergency code they can use in certain circumstances.
Gillis said the device benefits car dealers and not consumers. He advises consumers with bad credit to buy less-expensive automobiles.
Rapp said he has about 160 customers, mostly low- to moderate-income earners with bad credit or no credit at all, who have the device in their automobiles.
"This isn't a complete answer and it's not 100 percent sure, but what it does is it keeps them from taking my cars," he said.
Rapp said that since he began installing the device, only 5 percent of his customers have missed their car payments. And not only has he not lost a car, he has also saved 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."
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