Don't miss a car payment!

Car won't start? Pay up and it will
March 6, 2003: 4:15 PM EST
By Jonah Freedman, CNN/Money Contributing Writer


NEW YORK (CNN/Money) - If you don't pay the electric bill, the electric company shuts off the power. If you don't pay your phone bill, your phone stops working. Now people with weak credit histories can have one more thing that stops working when they miss a payment. Their cars.

Starter-interrupt devices, which allow auto financiers to remotely disable cars, are starting to grow in popularity among smaller car dealerships and financing companies who cater mostly to customers with poor credit. A handful of companies manufacture variations of the device, which dealers install on automobiles in order to enforce payment plans.

"What we've done is effectively moved car payments in priority up near gas and phone payments," said Mike Simon, CEO of Payment Protection Systems.


Passtime starter-interrupt device
The company, based in Temecula, Calif., manufacturers the On Time system, in which a microchip in the vehicle carries payment-plan data and keeps the car buyer schedule honest with a small red light on the dashboard that blinks when it's time to pay up.

Most starter-interrupt systems also feature a small keypad. When customers miss a payment and their car is shut off, they must contact the dealer and make their payment. They then enter a code supplied by the dealer or financier to start the car. Some systems, like Pay Technologies' PayTeck, require car owners to enter a code after making each scheduled payment.

Payment Protection Systems is growing at a rate of more than 40 percent, said Simon, with a roster of 350 clients. Stan Schwarz said his Denver-based PassTime's client list is now in the thousands.

The start of starter-interrupt
Starter-interrupt systems began appearing slowly on smaller car lots in the late 1990s, mostly at so-called "buy-here, pay-here" dealerships. Such dealerships, which finance the cars they sell, often attract buyers with poor credit history.

The technology was met with serious skepticism at first, stemming from both privacy issues -- some starter-interrupt devices, such as those made by Aircept of Irvine, Calf., have global positioning technology that allows dealers to find out where a car is located -- and possible liability suits.

In 2000, two Michigan women sued former football-star-turned-car-dealer Mel Farr, claiming such devices stopped their cars while they were driving. The case settled out of court and Farr agreed to put newer starter-interrupt devices on his cars, according to court documents.

Farr, who operates Triple M Finance near Detroit, said he still uses the On Time device and has sold between 4,000 and 5,000 cars with the device on them.

"Some (buyers) had concern initially, but we'd give them an explanation and went through the mechanics of it with them," Farr said. "This device is connected only to the starter; there's no way it will stop the car."

Gary Burton, general manager of Key Life Cars in Dalton, Ga., outfits all the cars on his lot with the PayTeck system.

"I love it," he said. "People are actually making their payments."