Blas Pietrafese, owner of Broadway Auto Sales in Maple Heights, is
tired of hiring repo men to take back cars customers stop paying
for.
The service is expensive for him, the experience ugly for the
customer and no one is happy in the end. But Pietrafese thinks he may be
able to put a stop to that unpleasantness with a tiny electronic gadget
called On Time.
The unobtrusive, re-usable 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.
Its a different mind-set when you get in your car and theres a red
light Said Peitrafese, whose used-car dealership in suburban
Cleveland started using On Time Payment Protection Systems three months
ago. When Friday rolls around and they have to cash their checks, instead
of being priority C or D, we will be priority A 0r B.
Mike Simon, chief executive officer and president for Payment
Protection System in Temecula, Calif., said finance companies are more
willing to lower the interest rates for those with bad credit with the
assurance that they'll make their payments.
Since the launch of the device, Simon said, the privately owned
company has experienced 40 percent growth annually.
To date, about 90,000 On Time systems have been sold. Dealership,
leasing business and finance companies buy them.
More than 400 used-car dealers in the United States and Canada use
the technology. And 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 caps: Its getting people to make their payments. he
said.
On Time is not without de-tractors.
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..
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Gills said the product could have potentially grave consequences in
emergencies, and accidents could occur if the device malfunctions while
the car is in traffic.
Simon said there have been no malfunctions and drivers get an
emergency code to use in certain circumstances.
Gillis said the device benefits car dealers and not
consumers.
Pietrafese of Broadway Auto Sales said he has installed two units
in customers cars. One was for an existing customer who continually failed
to make payments on time.
The dealership has a contract with On Time Payment Protection
Systems for eighty more units Pietrafese said. That expenditure is small,
though, compared with the $3,000 to $5,000 a year Pietrafese said he pays
repossession services.
Im looking forward to not having to use repo men, Pietrafese said.
We pass on the cost to customer. If we have someone who is late on
payments and we have to repo their car, the cost of the repossession is
added to what they already owe. It makes a $500 balance an $850 balance.
And if someone isn't going to pay $500, they aren't going to pay
$850.
Jim Commisso of First Choice Auto Sales in Defiance is an example
of where Pietrafese hopes to be in a few years. Repo men are a rare sight
at the northwest Ohio dealership since it started using On Time about two
years ago.
Before, about 170 customers out of 500 were behind on their car
payments. That number is now in the mid-50s, said Commisso, a managing
partner at First Choice.
The dealership installs the device in every vehicle leased to
someone with bad credit or no credit. Hundreds have gone out so far and
few complaints have come back, Commisso said.
The customer, they
think its kind of neat, he said.
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