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 keeping 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 system have been sold. More than 400 used-car
dealership in the United States and Canada use it.
Dealerships, leasing business and finance companies but
them.
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 problem 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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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.
The 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 dealer's 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 $129 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 many cars, he
has also saved money on repossession fees.
Rapp said his company's repossession rate decrease from 100 cars a
year to 30 after using the ONTIME® Device.
It's been good for customers because it makes them a lot more
responsible and helps their credit by making them pay ONTIME®, Rapp said.
I spend a whole lot less time chasing people.
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