Payment protector cuts ‘buy here, pay here' risk

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Running a “Buy Here, Pay Here” operation can be lucrative. But as with most business decisions, all that potential profit also comes with a risk. After all, you’re dealing with high-risk customers.

So what can you do to protect yourself? Is there any way to hedge your bets?

“Why not try a payment protector?” suggests James Krane, Canadian general manager of SekurPay Canada Inc. A payment protector is an electronic device installed in the leased vehicle that reminds the customer when payment is due and turns off the vehicle if payment is not on time, he says.

“The average delinquency in Buy Here, Pay Here is 30 to 40 per cent,” adds Krane. “We have seen delinquency rates on one of the leasing companies that uses the OnTime SekurPay system go from 45 per cent for over 4,000 files (vehicles) to single digit rates.”

He boasts that the SekurPay system has tamed the riskiest credit markets that pay the highest interest rates and turned the riskiest customers into the best payers. 

He explained to Canadian AutoWorld how OnTime SekurPay works.

The device, a four-digit, keypad that looks like a small radio, sits in the dash of the
vehicle. An LED light shows green when the payments are current.

When a payment is due, it flashes orange and will continue to flash orange for seven days after the due date. On the eighth day, it will flash red and the number three will appear. On the ninth day, the number two appears; on the 10th day, when the number one appears, the unit will beep loudly to warn the debtor that if a payment isn’t made, the vehicle’s ignition will be disabled at day’s end.
 
- Look for more on this story in the next issue of Canadian AutoWorld -