The credit squeeze that has helped to put the brakes on the US economy is now stalling cars as finance companies and auto retailers install electronic repossession devices that kick-in if a buyer misses a payment.
Lender Finance, a Michigan-based car-loan company, installs the devices on all automobiles bought by high credit-risk clients.
"It's a great teacher for paying one's bills," said Lender Finance's Richard Vanderport.
California-based Sekurus has equipped a quarter-million cars with its "On Time" automatic repossession device. It shows a green light on the fascia but only until instalment time comes around, when it flashes yellow
'It's a great teacher for paying one's bills'
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"The light is green when you're good; when your payment is due it turns yellow," explained Mike Simon, chief executive of Sekurus. "Then it starts beeping non-stop and, if the payment isn't made, it will refuse to restart after the engine is turned off."
A sort of no-go tone...
Rather like a pre-paid electricity meter, the driver is given a code against payment to punch into the machine to keep the car going - until the next time.
The "On Time" devices also have a GPS component so a defaulting customer has nowhere to hide.
Sekurus saw "On Time" sales grow by 30 percent in the first quarter of 2008 and is moving into Britain, China and Dubai.
Consumer groups, however, are worried that the devices could put drivers in danger
The driver is given a code against payment
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John Van Alst, a lawyer with the National Consumer Law Centre, suggested: "Let's say a mother and child out in the middle of nowhere, maybe in a dangerous neighbourhood. Suddenly the device kicks in - she's failed to make the payment and she can't start the car."
Sekurus has that covered. "The car doesn't stop while driving. It works on the starter, not on the ignition, and if the driver has an emergency we have an emergency code that is good for three starts or 24 hours."
"And if the driver didn't make a payment and has to go the hospital, for example... we have an emergency code that they can use three times. It's good for 24 hours," he added.
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