UK
A UK company is to launch starter interrupt devices for use in
leased or financed cars, with the aim of cutting debtor delinquency
rates.
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Prompt Pay UK Ltd has licensed the technology for the devices
from Sekurus International LLC, the US patent holder, which has
sold over 1m units internationally.Already, Prompt Pay said,
several UK motor finance and car rental companies have trialled the
starter interrupt products, with one major sub-prime specialist set
to announce its adoption of the technology in the next few
months.
In the US, starter interrupt devices have been used for several
years, and have been found to reduce significantly levels of loan
defaults, especially among sub-prime customers. They give finance
and leasing customers a strong incentive to make payments on time,
said Prompt Pay’s development director, Patrick Murray, as without
inputting a six-digit code the device stops the car from starting.
Fresh codes are issued once payment is received, and can be sent to
mobile phones or via email, or obtained through a phone call.
Murray emphasised that the devices would never stop a car that
was running when the deadline for payment passed. Drivers of cars
fitted with the devices are also issued with several single-use
only codes, for use in emergencies.
The device designed for use by finance companies is known as
Sekurpay OnTime, while the Sekurpay Flex system is for car rental
companies.
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By GlobalDataDelinquency cut drastically
A survey by the US National Independent Automobile Dealers
Association found that installing starter interrupt devices
typically cut delinquency rates from an average of 15-30 per cent
to as little as 2.7 per cent.This means lenders can offer lower
APRs to their sub-prime customers, as they have much greater asset
security. “In addition starter interruption technology allows
lenders to offer loans to people who would otherwise never have
been able to qualify for motor finance or a car lease,” Murray
said. “This opens up new markets to finance companies.”
Another central benefit is that the devices drastically reduce
levels of fraud. “Fraudsters will walk away rather than take a car
with the OnTime system fitted, as they know they won’t be able to
default and get away with it,” Murray said.
Murray is emphatic that there are no legal barriers to their
introduction. Prompt Pay has solicited responses from the
Department for Transport, VOSA, and Trading Standards, among
others, all of which have given the technology a legal green light,
as has Stephen Finch, asset finance partner at law firm Salans.
Credit crunch a boon?
The recent troubles in the global finance industry “could not
have come at a better time for Prompt Pay,” Murray noted, as banks
and financial institutions steer clear of unsecured bundled assets
and income streams and scale back their underwriting
activities.
“The value of a finance company’s book with OnTime technology
will be far greater as it is much better performing,” Murray said,
adding that he believed Yes Car Credit “could have been saved” had
the OnTime starter interrupt technology been available to it.
