- The Washington Times - Tuesday, November 29, 2005

From combined dispatches

NORFOLK — The repo man may be getting the hook.

An electronic device that attaches to a car’s ignition system easily can take the place of a tow-truck repossession, and the units are finding their way onto high-risk car lots across the country. No pay, no start.

It’s worked wonders at Norfolk’s Patriot Auto Sales, where nearly every car that is driven off the lot is outfitted with a PayTeck Smart Box, a system that hands over a five-digit code in exchange for each payment.

Come due date, the car won’t crank until the customer punches the code into a palm-size keypad wired into the dash.



Patriot is the kind of operation that specializes in steeper interest, high-risk car loans. It advertises “no turndowns” — a corner of the used-car business that deals with a “credit-challenged” clientele, as the industry puts it.

“Bad credit?” asked Art Madden, Patriot’s general manager. “I’d be happy if they just had bad credit.”

Not surprisingly, default rates are high. It’s not unusual for more than a third of the cars sold off such lots to wind up being repossessed.

Since Patriot began using PayTeck three years ago, its repossession rate has dropped from about 45 percent to less than 15 percent.

Mr. Madden figures he has close to 500 of the $200 units on the road, an investment that not only has cut the number of repossessions but also has boosted business.

“Without it, we could never make a lot of the sales we do — not if we wanted to keep our doors open,” Mr. Madden said.

Buyers sign forms acknowledging the Smart Box, agreeing not to tamper with it and promising to return to the dealership for a free removal after the last payment is made.

Payments are due every two weeks at Patriot. Sales staff program the first due date into the Smart Box, and the system keeps track from there.

As time runs out, tiny lights on the keypad shift from green to red, and a chirping noise provides an audible nudge.

Codes, once keyed in, reset the box for another two weeks. There is a four-day grace period. After that, the unit kicks in and voila: no vroom.

The systems will not cut off a running motor, but critics still worry about safety.

No-start systems, however, have held up in court. To minimize risks, though, Patriot times its no-start systems to switch on at 4 a.m., when cars are more likely to be parked at home. In the case of an emergency, special codes can be used to override the system for one 24-hour period.

And, Mr. Madden said: “We work with people, if they seem to be making an honest effort. But if we don’t hear nothing from them or the same relative dies for the third or fourth time, bam. Guess what? You’re going nowhere.”

Mike Simon is president of Payment Protection Systems, one of the pioneers and now among the largest producers of devices that “move the car payment from the lowest priority to among the highest,” Mr. Simon said.

Based in Temecula, Calif., the company initially dealt in automobile anti-theft technology.

But at a car convention in the mid-1990s, a dealer commented to Mr. Simon that while security is a fine thing, what he really needed was a way to make customers honor their loans.

The company started marketing its On Time system in 1999, selling more than 200,000 units at last count. Of late, they’ve shipped to England, Mexico and South America.

“The need is the same everywhere,” Mr. Simon said. “Most people want to pay, but it’s not hard for them to get into financial trouble.”

At Patriot, Mr. Madden says, he’s in the process of switching to a new Internet-based system that doesn’t use codes.

The system requires fewer staff members to manage and will allow him to pick the moment when a car carrying one of his loans will not start.

With one phone call, he can shut down a driver anywhere in the country for nonpayment.

“It’s all the difference for us,” Mr. Madden said. “We don’t really like it, but it sure works.”

The use of similar devices has grown from 14 percent of independent car dealers surveyed in 2003 to 17 percent in 2004, according to the National Independent Automobile Dealers Association, an Arlington, Texas, trade group of more than 17,000 dealers nationwide.

“It is a trend that has been successful,” said Leesa Jackson, a spokeswoman for NIADA. “We’ve heard a lot of good things about dealerships being able to take more of a chance on high-risk consumers.”

Silver Spring Used Cars and Trucks on Brookville Road has been using WebTech Global Positioning System-enabled devices on its more expensive cars for nearly a year, said office administrator Jasmin Cruz.

“Some of them are just too expensive to risk losing,” said Ms. Cruz, who added that the dealer uses only a handful because the devices cost about $400 each. In addition to shut-off functions, the WebTech system can track a vehicle’s location. “Stopping it won’t help us, not knowing where the vehicle is.”

Ms. Cruz said the retailer has not yet needed to use the GPS system to track an abandoned vehicle.

“It makes us feel a little bit at ease, even if the customer is paying on time,” she said.

• Staff writer Kara Rowland contributed to this report.

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