High-Tech "Repo Man" Helps Dealerships Manage Loss

By: Sue Kwon

The auto repossession rate has hit the highest level in a decade - 1.5 million last year alone. That number is expected to jump 10 percent in 2008 as more consumers are squeezed with credit problems and high gas prices. Dealerships need to sell cars. But they don't want the risk.

So, more dealerships are using a high tech device that tracks down cars when customers don't pay the monthly bill. Starter interrupt devices have been around for a decade, but now they are being used by traditional dealerships as well as those catering to high-risk subprime customers.

Tomesha Miles is buying her first car. It's something she's been unable to do for years because of her weak credit background. But she has a stable job as a Post Office employee.

No Credit Check Auto Sales is willing to bank on Mills paying her bills as long the car she is buying has a high- tech version of the "repo-man". It's the electronic tracking and payment reminder device made by Passtime USA. It only lets her drive the car if she makes the monthly payments.

The small unit is attached to the car's ignition system and programmed to give off an annoying ring when the bill is due. They are placed in every car that drives off the lot.

Almost half of Jun Li's customers wait until the last minute and hear that awful sound. But the warning's enough to get most to pay up - fast.

"After a grace period of five days, it'll stop. It cannot start," Li said.

The device has a GPS locator. So Jun Li can sit at his desk, and see a map of where to send the repo tow truck. It sounds drastic, but protecting profits is more important than ever these days. There are 7 million borrowers who are subprime and consumers with good credit are finding it hard to pay the bills in this tough economy.

Dealerships specializing in high risk borrowers aren't the only ones using starter interrupt devices. Passtime USA says in the past year the Colorado company has received more inquiries and orders from traditional dealerships and they are willing to pay anywhere from $200-$600 per unit.

At No Credit Check Auto Sales, the customer covers the cost which is about $15 a month.

Tomesha Miles is glad to pay it for the chance to own a car.

"I used to spend 4 hours on public transportation," she said. "Now I cut that down to 1 hour. I'll keep going to work and keep making payments on time. They are only $246 a month. I can do that."

 

[EDIT] No matter what you do to a car, when it's in default, a trained Recovery Agent will still have to pick it up and in cases like these, deal with the pissed off debtor - db