Sekurus On Time | Auto Disabler | Subprime Lenders

The mortgage industry has been embroiled in scandal ever since the foreclosure rate for sub-prime lenders began to reach historic levels earlier this year. Financially vulnerable consumers, who were told just a few years earlier that they could afford a home in the form of "special" financing, were Mazda CX-7 promised a piece of the American dream. That dream soon proved to be a nightmare as poor homeowners could not keep up with rising interest rates and the resultant higher monthly mortgage payments.

Soon, thousands of homeowners found themselves forced to relinquish their properties as the companies holding these mortgages reflexively laid off personnel and wrote off their losses. Not to be left out, the automotive financing industry -- conspicuously ignoring the mistakes of their mortgage lending peers -- is targeting sub-prime borrowers as never before. However, these lenders now have a handy tool in their arsenal to force borrowers to pay: many vehicles are equipped with an under-the-dashboard unit designed to disable the car if a loan payment is past due. Thanks to a $250 device[1] owned by an international asset protection company, motorists are being forced to pay up or risk being stranded.

On Time, Or Else

With three days left before a payment is due, a warning light highlighting the number 3 flashes on the Sekurus On Time device. Each day closer to the payment due date another light flashes until the number 1 button light ups and the unit beeps. This final warning, one of three sent, signals to the motorist that they have less than 24 hours to make their payment before their car is disabled.[2]

Sekurus Purchases Payment Protection Systems

Sekurus' involvement with the payment device came to the company by means of a merger. In September 2006, the company announced[3] that they had merged with Payment Protection Systems, the company who originally developed the disabling device. Today, Sekurus claims to have sold the device to more than 1500 dealerships with installation completed in over 250,000 vehicles. Sekurus reports that its On Time device has been credited with lowering delinquency rates from 27% to 3%, making the unit very attractive to sub-prime automotive lenders.

Lending To The Poor

Used car dealers have always marketed their vehicles to the poor as these types of dealers have often been the only ones willing to strike a deal. Of course, low creditworthy consumers would pay exorbitant interest for the privilege of purchasing a used car, at rates as high as 25%.[4] Today, some new car dealers are also finding low income buyers to be a potential market. In the past, most lenders would have stayed away from the $75 billion sub-prime market[5], but with the Sekurus On Time device available, a whole new consumer market has opened up.

Avoid Trouble By Understanding Your Loan Agreement

If you are a borrower who needs a car, it is important for you to understand what you are getting into before signing a loan contract. State consumer laws give to you certain rights, but lenders have rights too. Do not assume that anyone is looking out for your best interests -- the lower your credit score, the higher the interest rate for your loan will be.

Before signing a note, you should consider the following:

Obtain copies of your credit report. These reports are issued to your for free although the all-important credit score (the figure lenders use to help them determine your interest rate) is available to you for a nominal charge. If there are errors in your credit report, make certain that they are corrected before applying for a loan. Any negative information about you (whether correct or not) will adversely impact your score. Therefore, it is critical that your reports be accurate and up-to-date before you apply for any loan.[6]

Understand your loan. Find out what your down payment, interest rate, monthly and total payments are before you sign your contract. Check carefully for hidden charges, penalties, and make sure that any warranty offered provides adequate coverage.

Learn If the Sekurus On Time Device is present. Find out if the Sekurus On Time unit will be installed on your car. While making payments every month is important toward building your credit, you won't have any grace period available should you happen to be late during any given month. A stranded vehicle can cause you to lose your job or keep you from responding in the event of an emergency -- are you willing to accept this level of risk?

Unlike the sub-prime mortgage industry, sub-prime auto lenders now have a device available to them that will force vulnerable consumers to pay up or else. What is good for the lending industry can prove to be disastrous for some financially challenged and unsuspecting consumers, so learn the facts or risk being stranded!

Notes:

[1] RoboRepo: Pay Up Or Stall Out, Business Week, May 21, 2007, page 14.

[2] How On Time Works, http://www.sekurusontime.com/PRODUCTS/HOWONTIMEWORKS/tabid/58/Default.aspx

[3] Payment Protection Systems Merges With Sekurus, http://www.automotive.com/features/90/auto-news/22986/index.html

[4] The Poverty Business, Business Week, May 21, 2007, page 57.

[5] Late With Your Car Payment? ON TIME System Equipped Cars Won't Start, http://www.bloggingstocks.com/2007/06/15/late-with-your-car-payment-on-time-system-equipped-cars-wont-s/

[6] Free Credit Reports: Get Yours Today!, http://www.thearticlewriter.com/free-credit-reports-get-yours-today.htm

Author Information:

Copyright 2007-2008 – Matt Keegan is a freelance writer and web designer known as The Article Writer. Matt will take your concept to completion and give back to you a well crafted and persuasive finished product certain to have a positive impact on your business. Visit Matt’s blog, too, for his ideas about what good writing is all about.